Schedule 20

HC Deb 04 July 1968 vol 767 cc1786-858

REPEALS

Amendments made: No. 65, in page 112, line 43, at end insert:

1967 c. 54

The Finance Act 1967

In section 33(3) the words from 'and" year of assessment"' to the end of the subsection.

No. 72, in page 114, line 8, at end insert:

1965 c. 25

The Finance Act 1965

In Schedule 17, paragraph 4(3), the words from ' and as regards ' to 'each of the others' as respects a distribution made after 10th April 1968.

—[Mr Roy Jenkins.]

Order for Third Reading read.— [Queen's consent on behalf of the Crown signified]

7.6 p.m.

The Chancellor of the Exchequer (Mr. Roy Jenkins)

I beg to move, That the Bill be now read the Third time.

This brings us to the last stage of what has inevitably been a controversial Finance Bill. It has been so, I think, for two reasons. First, it has raised a great deal, an almost unprecedented amount, of additional revenue. Second, the Committee stage for the first time has been taken upstairs, and as a result there has been a lot of complaint from hon. and right hon. Members opposite that they have not had adequate time or an adequate audience to whom to deploy their arguments. There may have been inadequacy of deployment, I do not know, but that has not been due to lack of time.

In Committee we spent 118 hours 45 minutes net of meal breaks—more time than on any Finance Bill, save that of 1965, for 40 years—and since we have spent 39 hours on the Floor of the House on Recommittal and Report, longer than on any Finance Bill since the end of the war. If parts of the Bill have not been discussed, this I think has been by the choice of hon. Members opposite. Other parts have been discussed and re-discussed almost ad nauseam. So far as the adequacy of the audience was concerned, I could not help noticing that on most occasions more hon. Members were present in the Committee than were present on the Floor of the House.

I thought that some of the debates upstairs, particularly after the Guillotine, when we had given up discussing whether the windows should be opened or how long the dinner break should be, were of a higher standard and reached more across party lines than those on the Floor. I do not, however, think that we arrived at the ideal arrangement this year. Largely this was because many hon. Members opposite were determined not to give the new scheme a fair trial, but I think there were other faults too. In particular I am sceptical whether the two and a half days of Recommittal—in effect another canter round the same course mostly by the same horses—proved worth while. I am more attracted by the suggestion of my hon. Friend the Member for Birmingham, Northfield (Mr. Chapman)—and I believe that the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) made a similar suggestion in the past—that we should continue to take the more technical Amendments upstairs, but that the wider issues of some general interest—the standard rate of Income Tax, the regulator Clause, and this year the aggregation of income principle, the main Purchase Tax changes, and Vehicle Excise Duty—these are obvious examples—should be taken downstairs. But that would require agreement. I hope it will be forthcoming.

I turn from how we have dealt with the Bill to its contents and its purpose. First on the contents. The object of the Bill has been to raise a very large sum of additional revenue in as fair a way as possible without impairing incentive.

The balance of the measures has, I believe, stood up reasonably well to many weeks of searching criticism. On the scope of the measures, I must confess that the attitude of the Opposition causes me some confusion. Hon. and right hon. Members opposite claim concern about the high level of consumption, although their concern, as I shall indicate later, is not, I believe, in accord with the facts. Yet the right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod), when I pressed him in Committee, said that he inclined to the view that I have done too much in the Budget. They also argued —and it is now well-worn argument on both sides—that I should have used the regulator before the Budget; yet in Committee and on Report the Opposition spoke and voted against almost every Finance Bill proposal which marched alongside what the regulator would have done. So I do not detect much consistency here.

Inevitably, in the circumstances of this Finance Bill, we have had to be very sparing in concessions in getting the Bill through its various stages, and my right hon. and hon. Friends in the Treasury, who have borne the heat and burden, not of the day but of many days and some nights, have had to give a somewhat stony-hearted impression, far removed from their true natures. But we have made a number of concessions, including a very substantial addition to the parts of Scotland in which hotels are exempt from S.E.T.

I come to the Bill as a whole, and to its main purpose. This is to give effect to the broad economic strategy of modifying the pattern of economic demand and activity so as to enable us to take full advantage of devaluation and establish a substantial and continuing balance of payments surplus. My right hon. Friend the Home Secretary began that process with the measures taken last November; the January measures to restrain the growth of public expenditure followed, and the Budget concluded the process, with massive measures to restrain private spending and notably consumer expenditure. This was by any standards a formidable—indeed, an unprecedented —combination of measures, bound in due course to produce a significant and beneficial structural change in the economy.

There has recently been expressed in some quarters some impatience in case the measures may not be working as we expected. One of the lessons we should all have learned from experience of the post-war period, and perhaps before that, is that it takes a considerable time for fiscal measures to work through and for their effects to show up in the statistical indicators. Decisions in the field of public expenditure, in particular, take a long time to affect activity unless they are of the brutal and totally uneconomic kind that stops in its tracks work already started.

But budgetary measures also take some time to work through, and the measures which I announced on 19th March—still only 15 weeks ago—are no exception. Even those that took immediate effect on Budget Day would only begin to be reflected in the indicators after several weeks, and some—notably the increase in S.E.T.—have still to come into operation. The effects of the Budget measures are thus only now beginning to be apparent, and their impact can be expected to grow in the weeks and months to come. The same thing applies to the intensification of credit restrictions which were announced at the end of May. As the banks themselves made clear, and as I recognised at the time, they needed time to review overdraft limits and bring down outstanding advances. This could not be done in a few days.

Where then do we now stand in relation to the forecasts that I gave to the House at the time of the Budget? Hon. Members opposite now like to believe that those forecasts have all gone wrong. They also like to combine deep scepticism about all forecasts with pressing me at every Question Time not merely to rest on publishing more than any Chancellor has even done before but to publish a new forecast each month.

I take a more moderate view on both counts. But I can assure the House that on the domestic front we are broadly where we expected to be. Our latest figures suggest that consumer spending at the end of 1967 was, in fact, at a slightly higher level than we believed at the time of the Budget, but the signs are that it is coming down very much as we expected. The seasonally adjusted index of retail sales fell from 106 in the first quarter of 1968 to 102 in April and to 100 in May. Differences in the timing of the Spring Holiday in different years make the seasonal adjustment a little uncertain, but it seems reasonable to deduce that the volume of retail trade is now running at a level not very different from that in the first half of 1967, before consumers' expenditure began to expand through the second half of that year.

Instalment credit debt fell by £9 million in April and by £6 million in May, compared with the rise of £31 million in the first quarter. New credit advanced by finance houses in April and May was well down on the level for the first quarter. The available evidence suggests that new registrations of private cars are running at a much lower rate than in the first quarter, and well below the average for last year. On consumer spending, therefore, the measures have begun to bite, and the effects are beginning to show up in the indicators. These effects should become more pronounced in the coming months as we adjust to a new level of consumer spending.

Public expenditure this year is running very close to the figures given in the January White Paper. I am keeping it closely under review, so that any corrective action which may be necessary at the margin can be taken.

We are also at least fully up to forecast with our exports. Allowing for the diminishing importance of shipments delayed by last year's strikes in the docks, the trend of exports is clearly upwards. The export order position is also encouraging: large increases in the shipbuilding and textile industries, an increase in the engineering industry, and car production for export during the three months March to May nearly two-thirds higher than in the second half of last year. The latest C.B.I. survey shows a continuing and high degree of optimism throughout export industries.

It is only in the field of imports that progress has been disappointingly slow. The June figures will not be available until next week, and in any case it is always dangerous to deduce trends from figures for a single month. But the level of imports in April and May, though a little better than the peak levels of February and March, was still a good deal higher than we allowed for in the forecasts on which the Budget was based. The visible trade deficit has thus been continuing at a high level.

We can, however, look forward with reasonable confidence to a considerably better result on the balance of payments on combined current and long-term capital account in the second quarter of 1968 than in the first, despite the high visible trade deficits for April and May. Net receipts from invisibles are keeping up reasonably well, and the long-term capital account for the second quarter will have nothing corresponding to the Shell rights issue that dominated the first quarter's figures. In addition, we may see some reduction in the outflow for portfolio investment.

The date at which we pass into balance of payments surplus must depend largely upon what happens to the visible trade balance. However, I shall not give any forecast on that tonight. Indeed, it would be idle to do so without a clearer understanding than we can as yet have of the reasons for the continuing high level of imports, for which there is no simple or straightforward explanation, in relation to the movements of the main components of domestic demand. The recently announced French trade measures certainly will not make our task any easier, although their direct effect on us can be exaggerated: France provides under 5 per cent. of our total overseas market.

As the effects of the Budget and of the intensified credit restrictions work through, imports should fall back from the recent level, and the combination of that with the growth of exports should lead to a steady improvement in the trade balance during the remaining months of this year. This is what I expect to see.

I do not in any way under-rate the magnitude of the burdens that this Bill imposes, nor the difficulties of asking for the degree of restraint on spending and on incomes that the strategy demands. But I am clear that the strategy itself is right and necessary, and I give notice that the Government intend to continue the policies that are necessary for the attainment of the objectives at which the strategy is directed. It involves the cooperation and understanding of all of us, inside and outside the House, and the realisation that failure to adhere to the strategy would mean something a good deal more unpalatable than this Bill and the two years hard slog that I predicted a few months ago.

It would be interesting to know what easier alternative the Opposition have to offer. The right hon. Member for Bexley (Mr. Heath) has been making a few much-heralded, but sparsely reported, speeches on the economic situation recently. He expanded his views, this time without any lack of space, in the Sunday Times last weekend. But he was even thinner about specific proposals than his right hon. Friend the Member for Enfield, West has been throughout the stages of the Bill. I wish to say nothing more about the right hon. Member for Bexley, although I would like to say something more about his recent speeches on a later occasion.

I sum up by saying that the Bill gives effect to the Government's strategy, as described in my Budget speech, as a way of distributing additional burdens equitably among the various categories of taxes and taxpayers. It also effects some significant, but not this year major, improvements in the efficiency and equity of the tax system. It has, I think, stood the test of scrutiny in the House and it is therefore with confidence that I commend it to the House.

7.21 p.m.

Mr. Higgins

We have been asked to accept the Motion that the Bill be read the Third time. I hope that my right hon. and hon. Friends will join me in the Division Lobby in opposing the Motion.

On Third reading we are concerned with what is in the Bill. It contains 57 Clauses and 20 Schedules. It is right to stress the fact that some of these have been debated under unprecedented conditions. The Committee stage was taken upstairs, and while I do not intend on this occasion to expand on the arguments against this course—they were admirably adduced by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) in a recent article in The Times —two points should be made.

The first is that by taking the Committee stage upstairs the debates lacked tempo. [HON. MEMBERS: "NO."] I say that because we were in a congested atmosphere, which meant that there could not be the same distinction, because of the atmosphere, between debates on important topics and those which were concerned with relatively minor matters. This distinction tended to be blurred, which meant that a great deal more time was necessarily taken. This would not have occurred with the emphasis that more important matters get when they are debated on the Floor of the House.

The Chancellor said that the attendance in the House had been smaller than the attendance in Committee upstairs. I do not accept that, and I dispute his comment as one who has spent a considerable amount of time taking part in the various debates on the Bill. In any event, it would not be surprising if what he said were so, after the Committee stage had been taken upstairs. Certainly it would not be surprising on the Recommittal stage, which all must consider to have been completely abortive, since it was not clear whether we would debate the major issues which many hon. Members were deprived from debating in Committee upstairs since they were not members of the Committee. We were, therefore, left at that stage with the crumbs which fell from the Committee's table. It is not surprising, therefore, if there was not as large an attendance in the House as one would normally expect.

Linked to this must be our consideration of hon. Members with constituency interests who would normally have put those interests forward in Committee and would then, if they felt that they had received a sympathetic reply or that they could make further progress, have pursued the matter as a natural sequence of events. It is not surprising, therefore, that on Report it was found difficult to get a reasonable debate going on some of the Clauses.

Mr. Stanley Orme (Salford, West)

There is obviously a wide difference of opinion developing about the value of taking the Committee stage of the Finance Bill upstairs. Would not the hon. Gentleman agree that had the Bill been timetabled from the beginning all issues could have been discussed, including the special levy? I suggest that the debates which we had on many subjects were outstanding in quality and that it would have been to the benefit of the whole discussion had a different approach been taken. I therefore do not accept the hon. Gentleman's point of view on this matter.

Mr. Higgins

I cannot accept the hon. Gentleman's statement, because when the timetable came into being it was subdivided and the Guillotine fell immediately, with the result that the special charge was not debated. It often happens that when a matter is discussed one finds a flaw in the Bill which should be pursued. That cannot be done if a Measure is divided up in the way the hon. Gentleman has suggested.

It is, in any event, unfortunate that we did not have an opportunity to debate the special charge. I prepared three different speeches on that subject and I finally reached the point of feeling that I was taking part in an athletic race with a number of false starts. Eventually, there having been three false starts, I got shot in the back by the starter at the last minute. It is unfortunate that complex matters which need to be discussed cannot be discussed because of the procedure that is adopted. That happened on this occasion and many matters were not fully discussed. On the other hand, because of the procedure adopted this year, we went over earlier parts of the Bill on a number of occasions. While they were important, other matters were not adequately discussed.

This is largely the same Bill as we were discussing on Second Reading. There have been some minor Purchase Tax changes relating to calendars and an important change, as the result of pressure brought to bear by my right hon. Friend the Member for Enfield, West, about the aggregation of minors' incomes and a concession concerning thalidomide babies. Other minor concessions have been made —about interest earned abroad and the matter which we were discussing a short while ago, the £25,000 limit—but, by and large, it is the same Bill as we were discussing on Second Reading.

It is necessary, therefore, to deal with some of the points that were made at that stage. It was implicit in some of the Chancellor's remarks that the Conservative Party would have had to do the same and that this is virtually a Conservative Finance Bill. This is not true.

Mr. Roy Jenkins

I hope that the hon. Gentleman is not crediting me with saying that either on Second Reading or on this Motion. I did not use those words, and I do not believe that what he said is the case.

Mr. Higgins

I take the right hon. Gentleman's point and I assure him that I do not wish to embarrass him unduly. When he spoke about the relationship between direct and indirect taxation he created that impression, but I accept that it was, perhaps, erroneously created.

We are told that this is the toughest Finance Bill ever. It is designed to raise £923 million. It should be stressed that this has come about as the result of the disastrous mismanagement of the economy, culminating in the devaluation of last year. [Interruption.] I appreciate that hon. Gentlemen opposite may not like listening to this. If one looks at what was said in the Third Reading debate on the Finance Act, 1967, one sees that the then Chancellor said: The economy is moving along the course that I had in mind when I made my Budget speech. Later he said: If that is exuberance, heaven help me when I really throw my bonnet over the windmill. I promise the House that there really will be something to talk about then. This is the course we embarked upon. This is the course we intend to stick to. I see nothing to make me depart from what I said earlier, namely, that a 3 per cent. growth rate can be combined with a balance of payments surplus …".—[OFFICIAL REPORT, 30th June, 1967; Vol. 749, c. 1142.] We should be given an explanation because the Bill stems directly from the mismanagement of the former Chancellor last year. The mistiming of economic measures has been the hallmark of the Labour Party since they took office in October, 1964, through every summer period since that date.

One reason why last year was so disastrous was because we did not have published forecasts which, had they been made available and had the Chancellor's assumptions been spelt out, would have enabled us to explain what might have been done in time. Public opinion would have built up by that means. I gladly agree with the present Chancellor that it is a great advance that forecasts have been published this year. That has been of great assistance and has enabled us to have more sensible debates about our economic situation. I would very much hope that nothing which has been said will in any way deter him or future Chancellors from continuing to publish forecasts, and, I hope, to publish them in more detail.

We are sceptical about forecasts, as I am sure that the Chancellor is. However, it means that we have an explicit statement tying up the various aspects of the figures, which is a great advantage. Therefore, although it is not easy to relate the day-to-day figures to those in the forecasts, because largely they are on different definitions, we are able to appraise the Bill this evening in the light of a sensibly stated set of forecasts. Even though we may have grave doubts as to whether the forecasts will turn out to be right, none the less the fact that they are set out is, I believe, a great advance in our Parliamentary procedures.

I want to ask two questions on this which are directly related to the Clauses. The Chancellor of the Exchequer will know that the forecasts do not include any allowance for price or cost changes. He has been very reluctant indeed to say what allowance he has made in putting forward the Bill and its various Clauses with regard to incomes policy. Yet at the end of last week in a debate on prices and incomes the figures which we have been searching for so much and which the Chancellor has been so reluctant to give, came out when the Under-Secretary of State for Employment and Productivity said, regarding the incomes policy: … I insist … that the minimum aim is not insignificant. Its outcome will, perhaps, be a reduction of effective demand of about £200 million."—[OFFICIAL REPORT, 27th June, 1968; Vol. 767, c. 895.] If that is so, and if that is the basis on which the Bill has been constructed, it is right and proper that whoever is to reply to the debate should tell us whether the Bill is put forward on the assumption that the prices and incomes policy would reduce he aggregate demand for £200 million or whether it has not been put forward on that basis, because this is a very important point indeed and it should be clarified.

The other point upon which the Chancellor himself touched in putting the Bill and its contents in context was the whole question of what is happening to exports and imports and the level of unemployment. In this context, we certainly share the view that there is some tendency for exports to be rising; and we are glad about that. However, we have some doubts about the import position, because in his Budget statement the Chancellor said this: … higher import prices in sterling... will tend to increase the import bill, as we have seen from the January and February trade figures But the price rise relative to home production should encourage import substitution, offsetting the rise in the volume of imports that would normally have accompanied rising demand and output; this should lead to a much reduced growth of imports in the coming months."—[OFFICIAL REPORT, 19th March, 1968; Vol. 761, c. 256.] We are glad that the Chancellor this evening has agreed that the import performance has been disappointing, because I am sure that it is much better than the Chancellor, if events are changing as we progress through time, should say so frankly, rather than feel obliged from day to day to adhere to the view which he originally took. This is surely the more sophisticated and more sensible way of tackling it than to say, "We must stick to our forecasts and it is a shame to attack them".

We appreciate that, as things develop, this is likely to change. Some of the expectations—for example, that of the Financial Secretary, who said on 24th April … we shall see a declining level of unemployment over the months ahead,"— [OFFICIAL REPORT, 24th April, 1968; Vol. 763, c. 404.] seem scarcely to have been vindicated.

The Chancellor of the Exchequer referred to the article of my right hon Friend the Leader of the Opposition which appeared in the Sunday Times. I want to quote one passage. My right hon. Friend was asked this: Do you think that raising the question in the way which you have done"— that is, about the economy— may itself tend to erode confidence …? My right hon. Friend said this: No … Of course all these facts are widely known in Europe and North America and are openly discussed daily. It is not the discussion of these facts which can cause damage to the national position. It is the failure to face up to the facts which causes anxiety to our friends overseas. It surely is the case that we should be failing in our duty as an Opposition if we did not look at the facts as they are produced and comment in a sensible and rational way upon them. It is the idea that it is wrong to discuss the facts which jeopardises the Government's measures, rather than anything else.

I turn now to the more detailed side of the Bill. We are certainly in a difficulty here, because, although there are lots of analogies of devaluations which were followed by no deflation and of devaluations which were followed immediately by deflation, there are very few devaluations which were followed by a delayed deflation, because normally no Government are so stupid as to adopt that course.

The point which I want to make here, because it did not seem to come out at all in what the Chancellor was saying is that it is not merely that the Government did not take action soon enough by using the regulator, and so on. The fact that the spending spree took place means that it will be followed by a restocking spree. Therefore, the effect of the delay will last, not for three months, perhaps, but for six or seven months as regards the effect on aggregate demand.

We do not accept the Chancellor's argument that, although we said that he should use the regulator, we voted against those parts of the Purchase Tax in the Budget which were concerned with it. We were debating there, first, the increase in the number of Purchase Tax rates—the wider spread; the increased anomalies; the fact that the luxury rate at 50 per cent. had been introduced. Clearly, the only way in which we could reasonably debate this was by tabling Amendments to reduce the rates. This in no way contradicts, as the Chancellor sought to suggest tonight, our belief that action should have been taken further.

I want to return to the point which the Chancellor made just now about this not being a Conservative Budget. I am glad that he confirmed that, because I certainly do not regard it as such; and I shall spell out precisely why. In doing so, I hope that I shall make some of the alternative proposals which the Chancellor said he would like to hear. The first point which needs to be made is that the Chancellor says that he is in favour of a change from direct to indirect taxation. So are we. This is a generally accepted view. I think that it is generally accepted that a move from direct to indirect taxation is a move in the right direction— [HON. MEMBERS: "Not by everybody."] —with the exception of the Left wing of the Labour Party.

What the Chancellor has done is to increase indirect taxation without reducing direct taxation. We believe that he has been wrong, first, in changing indirect taxation in the way he has—because of the anomalies which have been created, the broadening of the rate, and so on. As my right hon. Friend the Member for Enfield, West has pointed out, we believe that the logic of the situation leads us more towards a broadly based, low-rate, value-added tax, rather than this.

Secondly, it is a basic principle of the Government that they are always concerned with the immediate revenue, without looking further forward. For ex- ample, on the question of putting 2½ per cent. on Corporation Tax, we believe that there might well have been a stronger case for not doing that if it was desired to get an export-led boom. Exports were penalised enough at the time of devaluation by the removal of the export rebate, the imposition of the S.E.T. premium, higher import costs, higher labour costs, and so on. Then to tax all profits they made as well was, we believe, a wrong step.

A concession could have been made here and the Corporation Tax not increased. This would have meant that in the longer run the Revenue would have done better, because the export-led boom would have been more likely to have come about at an earlier stage. I believe that there is a case for moving from direct to indirect taxation. We are sorry that the Chancellor seems to us on this occasion to have done it in the wrong way as regards indirect taxation and not made any change as regards direct taxation.

Mr. Barnett

The hon. Gentleman has said that he will tell us what his policy is. He said that he would have a value-added tax to replace the Selective Employment Tax, the Corporation Tax, and all sorts of other taxes. Which items would he bring into it to make it more broadly based?

Mr. Higgins

We had discussed that matter before. I should be out of order if I attempted to go into it in this debate. It has been spelled out in speeches elsewhere. It is fairly clear what form of value-added tax is normally advocated by those who have studied this subject in any detail.

I turn from this subject to the question of Corporation Tax. I will answer directly the point which the hon. Gentleman has just made. We do not believe that the Corporation Tax as it now is is the right kind of Corporation Tax, because it discourages overseas investment and it encourages the plough-back of profits rather than the distribution of profits and a reinvestment of those profits elsewhere through the stock market into enterprises which are growing fast and which desperately need capital. That is a fundamental difference between the two parties, because, as my right hon. Friend the Leader of the Opposition pointed out when Corporation Tax was introduced, we believe that the survival of the fattest is not likely to lead to efficient action in the economy.

Another point has radically affected the Government's view throughout the Bill. It is right that any Government should be concerned about tax avoidance, but that is a vastly different matter from becoming obsessed with tax avoidance. The Government seem determined to block completely every minor loophole, regardless of the effect which that may have either on the economic situation or on various choices which may already have been made or even regardless of humanity. I take a couple of examples. The first was admirably deployed this evening by my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin)—the retrospective change which has been made in life insurance policies. That has meant that people who, rightly, over the years anticipated a certain outcome and invested in policies for 30 or 40 years, find that, by arbitrary act of the Government, those expectations are frustrated, all in the name of closing a loophole.

A similar comment applies to the whole structure of life insurance. We shall find reduction-of-premium policies which have been in operation for many years, perhaps for a century or more, suddenly wiped out because the Government are concerned in a quite different context, not with encouraging the insurance market or enabling it to operate efficiently but simply with closing yet another loophole. We must have a due regard to avoidance, but it is important that it should not become an obsession, and it is even more important that we should weigh the cost of one against the cost of the other.

I will not digress into the whole question of the mortgage option scheme and the effect which the Budget will have on those who believed what the Government said and who opted for the option mortgage scheme. That was admirably deployed by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) last evening on Report.

Certainly some of these tax changes are not changes which we on this side of the House feel ought to be supported. There is a vast difference between the two sides of the House on the question of the aggregation of an infant's income with the parent's income—as was shown in moving speeches by my right hon. Friend the Member for Enfield, West in Committee on 15th May, as reported in c. 851 of the OFFICIAL REPORT. He stressed that the Opposition Amendments were most important Amendments to the Bill, and certainly the most important Amendments to that Clause. We were given a concession on thalidomide babies, but we still have no concession in the case where—

Mr. Speaker

Order. The hon. Member may not talk about concessions which he did not get. He may talk about those which he did get.

Mr. Higgins

I am seeking to do that, Mr. Speaker. Within the Bill we still have Clause 15, which changes the law in such a way that many people who are in dire circumstances, and children in families where the main earner has died, will be penalised. There is a fundamental difference between the two parties.

That is true, too, of the special charge. We are forced to the conclusion that that was put into the Bill only because the Chancellor wished to raise the fort in a Budget and Finance Bill debate. We do not believe that it is a reasonable tactic to adopt. Next, there is Selective Employment Tax, which we on this side of the House are firmly committed to abolish. That is a fundamental difference between the two parties. We believe that the anomalies of this tax are legion. It is to be increased by 50 per cent., which will further increase these anomalies. While we are glad that some concession has been made in a few areas to particular hotels, nevertheless, we take the view that there is only one solution to this tax, which has been increased in the Bill by 50 per cent., and that is to abolish it.

As we totally disagree with all those taxes which I have mentioned, I very much hope that my right hon. and hon. Friends will join me in voting against the Finance Bill, which we believe is wrong in principle, which still includes many Clauses which will have a dire effect on a number of people and which is not an answer to our present economic situation.

7.45 p.m.

Mr. Barnett

We have had some differences of opinion between the two sides of the House whether the Bill should have been debated upstairs in Standing Committee or on the Floor of the House. A great deal of humbug has been spoken and written on the subject. We all know that it is open to an Opposition to frustrate any Bill, including a Finance Bill, whether it is debated upstairs in Committee or downstairs on the Floor of the House. By so frustrating the Bill, it is possible for them to ensure that the House has no debate on a number of Clauses, and it was possible on this occasion for them to see that the House had no debate on the special charge, other than the start of a debate on it this evening.

The Opposition made it clear from the beginning of the Bill that they had no intention of co-operating in the way in which the Finance Bill should go through the House. It is a little hypocritical for them now to argue that we lost an opportunity to debate many Clauses. I do not argue that the Opposition have deliberately filibustered. As hon. Members know, it is not necessary to do that. One could take any Finance Bill—not only this year's rather long Bill—and debate a quarter of it for the whole of a year. It is quite simple to do that. But, as we all know, normally the Government and the Opposition join in restraining back-bench Members—that is a normal practice—so that we have a reasonable discussion on all Clauses of the Bill. That did not happen this year, and some Clauses were not debated.

I know that the right hon. Member for Enfield, West (Mr. Iain Macleod) believes that it is impossible to restrain back-bench Members when we are in Committee upstairs. I respect his view and I know that he genuinely holds it. It is not strictly correct. I recollect that when we were in Committee there was an occasion on which the Parliamentary Secretary to the Ministry of Transport was reading rapidly from a brief and back-bench Members opposite were clearly dying to get into the debate. They were restrained and held on a leash, presumably by instruction.

Of course I recognise that the right hon. Member or anyone else leading an Op- position team in Committee upstairs would find it difficult to restrain backbench Members when everybody is present in Committee to debate a particular Clause. Leadership is not easy. But it needs to be exercised, and it was not exercised on this occasion—and that was not because of lack of ability, because, clearly, the right hon. Gentleman has the ability. It was because of a genuine constitutional desire to frustrate the will of the Government. That is fair enough. Those are legitimate tactics. But that does not represent an argument against debating the Bill upstairs in Committee rather than on the Floor of the House, because the same tactics could be deployed downstairs on the Floor of the House as in Standing Committee.

I believe that the idea of taking out the non-controversial Clauses and debating only those Clauses upstairs is a non-starter, and I am sorry that my right hon. Friend the Chancellor appeared to agree with it. If one looks through the 57 Clauses of this Bill, one sees that very few of them are non-controversial —perhaps other than Clause 57, the Title, or the Clause dealing with Premium Bonds, although to some hon. Members, that, too, would be controversial. I do not think that I could support my right hon. Friend's proposal in that respect.

We could, however, have a Select Committee on taxation after the Finance Bill had been passed and discuss Clauses which had been passed by the House and such provisions as those dealing with close companies affecting life insurance, certain personal allowances and so on. We could have a Select Committee on taxation. But I do not believe that splitting the Bill is an option, nor do I believe that we should attempt to do it. The tactics of the Opposition this year did not prove that we should not have the Bill upstairs. They simply proved, if proof were needed, that the price of an Opposition's using their democratic rights to the full is an inefficient Parliamentary system. It is a price that I think and hope we are all willing to pay, but it is a pity that the genuine interests of the taxpayers tend to get lost at the same time.

I hope that the Government will not give in to these tactics, and that my right hon. Friend the Chancellor will reconsider what he said at the start of this debate. With a timetable from the start, whether voluntary or otherwise; with more time upstairs in Committee, by using the time allocated to the Recommittal stage, which this year was a waste of time; and with better co-operation; the debates could be much more useful. I should have thought that Opposition hon. Members would have learned from last night how impossible it was to have a serious debate on an important Clause when, for example, the hon. and gallant Member for Knutsford (Sir W. Bromley-Davenport) joined in what should have been a serious debate. But it was a politically controversial Clause, and it is very difficult to debate such a Clause seriously on the Floor of the House.

Mr. Julian Ridsdale (Harwich)

Does the hon. Gentleman really want to debar people like myself from taking part in the Committee stage just because we have not been selected, when we have very important constituency points to make?

Mr. Barnett

I would not want to debar the hon. Gentleman from anything. I was discussing whether the House should decide to hold its debates on the Finance Bill upstairs or downstairs. There are opportunities to debate it fully if we take it upstairs, and we can debate it there more seriously and properly. As I said in a letter to The Times in reply to the article by the right hon. Member for Enfield, West, when we returned to the Floor we saw a very much smaller number of hon. Members present to debate it. The reply of the hon. Member for Worthing (Mr. Higgins) on that point was not valid.

We are now on Third Reading of a Bill which takes an extra £923 million out of the economy, yet we already hear talk that that is not enough. There is already a July madness with us again. I understand that in the rainy months the worms come up. July seems to be the month for Jeremiahs, and they are in full spate again this year, talking us into a crisis if they possibly can. I hope that my right hon. Friend the Chancellor will ignore the Jeremiahs. I agree with Peter Jay, who said in The Times this morning that the success of devaluation cannot be judged … less than eight months after the event from a motley collage of more or less outdated balance-of-payments statistics, notoriously inaccurate output data and speculation. If devaluation and the associated flanking measures are going to succeed in producing the necessary continuing balance-of-payments surplus of £300–500m. per year, it will do so over 18 months to two years. Nothing could be more hazardous for professional reputations or for the determined prosecution of the strategy than attempts to predict and monitor exact progress towards this goal month by month. The trouble is that there has been a great deal of confusion between economic and financial problems. It needs to be said that those who complain that the Finance Bill and the Budget strategy have still left the pound under such pressure as to need a second devaluation—and there are people saying this—are either ignorant or, much worse, evil-minded enough to be prepared to talk us into a crisis for political reasons. Fortunately, this tactic cannot work, for those who matter know that a second devaluation solves nothing and is simply not a proposition. The pressure on the pound has nothing to do with the Budget strategy and the Finance Bill, but with the sterling balances and the world monetary problems. There is nothing in the Finance Bill that deals with them, but if the result of the false crisis that we are in danger of talking ourselves into is that we talk ourselves and others into doing something about the sterling balances and the capital outflow, I for one shall be satisfied that we are getting something out of it.

I do not agree with the hon. Member for Worthing, who seemed to suggest that a Conservative Government would encourage capital outflow by reversing the method of dealing with it in the Corporation Tax. I cannot understand how he can suggest that we can do that this year or in the next year or two, even if in principle the idea is one which could be carried out.

The really serious figures recently— and here I agree with the hon. Gentleman —have been those for imports. It is true that so far the Budget strategy has had little effect on the level of imports, but the trend of retail sales at last appears to be encouraging. One should in this context recall that the National Institute of Economic and Social Research, despite its pessimism about the import figures, predicted a £300 million to £400 million surplus in 1969. We should all like a £500 million surplus and more. But it is crazy to talk of a crisis through a shortfall in surplus of £100 million to £200 million when seen in the perspective of the forecast for 1968 of total exports and imports, including invisibles, of over £17,000 million. Yet, to deal with this, we are told in many quarters that we need another mini-Finance Bill or a July package of deflation. This is simply not proved to be necessary in the context of any of the figures that have been brought to our notice, whether by the National Institute or anybody else. It would be disastrous to bring forward deflationary measures of such a description when unemployment is already at a higher level than many of us would like to see.

Mr. Iain Macleod

I am not at all sure which windmills the hon. Gentleman is tilting at. Neither my right hon. Friends nor I, nor, as far as I know, anyone on this side of the House, has suggested, of all things, that we need a deflationary package for a second time. There may be voices saying this, but they do not include Her Majesty's Opposition.

Mr. Barnett

Her Majesty's Opposition have only complained about the high level of imports, and have not said how they would deal with them. [Interruption.] If the hon. Gentleman who is tut-tutting wants to speak, let him do so.

Sir D. Glover

Her Majesty's Government also complain about the level of imports, and have also said nothing about what they will do about it.

Mr. Barnett

Her Majesty's Government have said that the level of imports, although higher than originally forecast, will still leave us with a trend which they are satisfied will give us a substantial surplus in 1969, and it seems to me that all the figures should satisfy us that that is so. Right hon. and hon. Members opposite have implied that the position is rather more serious, and yet they have not suggested how they would deal with it. That is my only point. I am not suggesting that the right hon. Gentleman was the windmill at which I was tilting. As he knows, there have been many articles by informed observers suggesting that such action might be needed.

If that is the price that my right hon. Friend is being asked to pay in order to do something about the sterling balances, I hope that he will be under no illusion not only that he should not accept it but that he cannot accept it, because I do not think that he could get it through the House. Fortunately, however, the central bankers see the problem somewhat differently from some in the House and some in the City. They know that in their interests as well as ours the Finance Bill and Budget strategy must be given time. I hope that we shall proceed in that direction now by giving the Bill a Third Reading.

7.59 p.m.

Sir Fitzroy Maclean (Bute and North Ayrshire)

I hope that the hon. Member for Heywood and Royton (Mr. Barnett) will forgive me if I do not follow him into the realms of high finance. I want briefly to register the strongest possible protest against what I think is about the most extraordinary feature of the Bill-namely, its savage and apparently deliberate discrimination against the hoteliers of North Ayrshire, in my constituency, by inflicting on them a 50 per cent. increase in Selective Employment Tax while exempting their immediate neighbours and about all the other comparable hoteliers in Scotland from the tax.

Incidentally it is disgraceful that once again there should be no Scottish Minister on the Government Front Bench when this sort of thing is being done to Scotland. This is not the first time that this has happened. It happens again and again. I commented on it when I spoke on the same subject on Second Reading.

Having vigorously opposed this iniquitous tax ever since it was introduced and constantly drawn attention to its deplorable impact on Scotland as a whole and particularly on the Scottish tourist industry, it would not make any sense for me to object to such action as the Government have taken, under pressure from my right hon. and hon. Friends and myself, to mitigate its effects. But by making as many exemptions as they have done—belatedly, but better late than never—they have by contrast greatly sharpened the effect and increased the unfairness; of the blow that they are dealing at the relatively few hoteliers outside the big cities and the industrial belt who are still to be penalised. These, for reasons which are totally incomprehensible to me, include those of all the famous Clyde tourist resorts of the North Ayrshire coast in my constituency. These are now to be penalised and hit harder than ever, while their neighbours, and, incidentally, their competitors, operating under identical circumstances hardly any distance away, are to be exempted altogether from S.E.T.

When I asked the Minister of State for Scotland to explain this yesterday all he could say in reply to my Question was that refunds are not being made in areas catering primarily for day trippers."—[OFFICIAL REPORT, 3rd July, 1968; Vol. 767, c. 1493.] This is absolute nonsense, and he knows it, and the Secretary of State also knows it. The Minister of State has actually contested my constituency, and if he did his job as a candidate properly he ought to have found out something about the tourist industry there. Again the Secretary of State is a neighbour in Ayrshire, and he, too, ought to know something about the rest of Ayrshire.

Skelmorlie, Largs, Fairlie, West Kilbride, Seamill, Ardrossan, Saltcoats and Stevenson do not cater primarily for day trippers. Largs, to take just one example, has a number of well-equipped hotels that cater for visitors from all over the world, who for the most part stay for a week or two, and some much longer, to enjoy its salubrious air and other amenities. The same can be said of a number of the other resorts that I have mentioned. They do this in exactly the same way as do the other Clyde resorts which have been exempted. Indeed, many of the other Clyde resorts—no names no pack drill—could with far more justice be described as catering for day trippers than, for example, Largs, Skelmorlie or Ardrossan.

When I spoke on Second Reading I said that the hoteliers of North Ayrshire were seething with indignation at the treatment meted out to them. At that time, three months ago, they had a great many more companions in misfortune than they do now. Now they have been singled out from all the resort hoteliers in Scotland for special punishment. Now that this has happened, to say that they are seething with indignation is no longer, I can assure the right hon. Gentleman, an adequate description of their frame of mind.

Three months ago, in April, the Scotsman headed its leading article on this subject: "Incompetent or mad?" This question has now been answered. We have long known that the present Government are incompetent, but I believe that to include such a provision as this in the Finance Bill they really must be stark, staring mad.

8.6 p.m.

Mr. Robert Sheldon (Ashton-under-Lyne)

I am very pleased to hear that my right hon. Friend the Chancellor of the Exchequer does not intend to give up the experiment of having the Committee stage of the Finance Bill upstairs. Although he pointed out one or two possible variations of this, perhaps those variations need some consideration.

In particular, I should have no objection to having the "Clause stand part" debate on some of the main issues taken on the Floor of the House where other hon. Members could take part. But all the Amendments, even to the big issues like Corporation Tax, Selective Employment Tax and Income Tax, should still go upstairs. This might be a way for hon. Members to take part in the Committee stage on the Floor of the House and for a better examination of the Bill upstairs.

I believe that we had very much better debates following the introduction of the Guillotine than any I can recall on previous Finance Bills. We had informed discussions mainly because the hon. Members who were there stayed there. Although one likes to give an opportunity to a number of hon. Members to take part in a debate, few can deny that when we have hon. Members just coming in, finding the place a little empty, speaking a little and then going out, it leads to a very confused debate, and it does not give the Clauses of the Bill the close examination that all of us want to see.

The problem that we had upstairs, as my hon. Friend the Member for Heywood and Royton (Mr. Barnett) pointed out, was caused by the attitude of the right hon. Member for Enfield, West (Mr. Iain Macleod). He opted out of control, and this was the reason why we had the protracted debates and why we did not discuss certain important Amendments which I was very sorry were not brought before the Committee despite the amount of time allowed for the Committee stage.

We know that there are the rights of the Opposition. A bargain is usually struck between the rights of the Opposition to control the length of their speeches in return for certain concessions given by the Treasury Bench. On this occasion, that kind of agreement was not made, and it is a pity that the Bill was not discussed as well as many of us would have liked. Perhaps next year or, more likely, the year after, we shall get the kind of informed discussion on the Bill that I should like to see.

In the meantime, I should like to add my voice to those that are growing in asking for some form of Select Committee to discuss certain matters which are not readily discussed by the making of speeches. The eliciting of information on certain technical matters is an extremely difficult thing to achieve by means of speeches and replies from the Treasury Bench. What we need is some session where questions can be put and answers can be obtained.

One of the main purposes of the Bill in connection with the raising of this large sum of money is to reduce consumption. We know that this is becoming harder to achieve each year as people become innured to appeals of this kind. In 1957, it was a relatively easy thing to achieve. In 1962, it was still fairly easy. But when we came to 1964 and up to 1968, it had become progressively hard as one preached difficult times ahead and people who had heard it so often before took less notice.

This is one of the great problems which my right hon. Friend the Chancellor of the Exchequer had to face. He was very realistic, and he decided to make sure once and for all that he had to take a certain amount of money out of the economy, and that even if it were too large at least he would err on the right side. This was of as immense importance as an attempt to end the days of hard talk about the future not being seriously believed. The import figures are still high and we may need to consider import quotas in due course, but this is a matter which I prefer to leave to the judgment of my right hon. Friend, although I hope that any action he may take will not be too late, as it has been so often in the past.

I wish to put two complaints to the Treasury Bench. The first concerns the lack of an explanatory memorandum. I put a Question to my hon. Friend the Financial Secretary on 25th June. I received a written reply pointing out that there were difficulties but that he was sympathetic to the general idea and that he would consider it carefully. I accept that he has a genuine desire to clarify and simplify taxation matters and even to reduce the burden of taxation; those who have been with him through the various stages of the Bill will accept that. But we know that such a memorandum exists. We cannot believe that those who go on to the Treasury Bench in a position of ignorance rapidly acquire a large amount of knowledge overnight. They are instructed in a very detailed way. If a memorandum, brief, or whatever it might be, were available to them, I should have thought that it was relatively easy to condense it and make it available to hon. Members. It should set out not the arguments so much as an explanation of how the Clauses are intended to work and what they mean.

I should have thought that this was well within the capability of the Treasury Bench. There is a precedent for it. There was a most valuable memorandum on the 1965 Finance Bill which was available not only to hon. Members but to the public. This was an excellent precedent and I am sorry that it was not followed in subsequent Finance Bills. We should ask the Treasury to make sure that when next year's Finance Bill is discussed we have an explanatory memorandum, which would be of value in our debates.

My second complaint, which is more serious, concerns the investigation by the Treasury of certain matters of fact and certain things which it can discover and which will be of great help to it in forming its tax proposals. This relates to the call which I made for research into some of the incentive and disincentive effects under which the Government operate. I do not believe that a call for research is any excuse for inaction. Decisions must be based on evidence, and if there is no evidence available, although the Government might try to obtain it, they must operate within the limits of what is already known. This I accept and understand. But, given the possibility of obtaining further information on which they can base their decisions, there is no excuse for further inaction.

I feel that this matter is particularly important, because this Bill introduced a fundamental change in direction. In the Budget statement, my right hon. Friend said—this has been quoted before but it is worth remembering— No earned income, save for the effects of the recoveries of family allowances, the principle of which had already been announced, will therefore be subject to higher direct taxation. This I believe to be justified on the ground of incentive."—[OFFICIAL REPORT, 19th March, 1968; Vol. 761, c. 296.] This was a fundamental change in the attitude of Chancellors of the Exchequer, at least from this Party. It was an accepance in principle of the disincentive argument of direct taxation. I should have thought that, with the Chancellor of the Exchequer accepting that £4,600 million was the limit that could be raised out of Income Tax and Surtax, some evidence of this attitude should be called for.

I do not blame the Chancellor of the Exchequer for coming to a situation in which the evidence was not available, but I believe that this omission should be put right. He decided that there was a level beyond which the disincentive effect of taxation would produce a rapid falling off of effort. I think that most of us know that such a situation exists, but we are all completely ignorant about just where it exists. In other fields, the Government are spending large sums of money—£100 million a year on the Regional Employment Premium, £250 million on investment grants, and a large sum on the Selective Employment Tax refund. This money is being spent to persuade people to do things which they would not otherwise do. If we are to persuade them to do them by offering large sums of money, we should at least spend a little money to see whether they are doing what we are trying to induce them to do.

The Government are raising £12,000 million a year. We on this side of the House now openly accept that there is a disincentive effect in a large part of that, and I should have thought that the least we could do was to spend a little money to discover something about the disincentive effect and how it might be reduced and what advantage, if any, might be taken of it or how the disadvantage could be diminished.

The Financial Secretary scorned such investigations as matters of opinion. But informed opinion is what we all want. In discussing the question of research or investigation, the Financial Secretary said on 19th June: We will merely get an expression of opinion rather than the ascertainment of fact, or we will get the kind of elaborate sociological investigation of the type that was conducted in the medical world into the effect of mother love on children. In that case, after several years of intensive research, those conducting it burst upon the world with the assertion that it is scientifically proved that children benefit from mother love. This kind of scorn and attitude is totally outdated. There are methods available and it is shameful that the Treasury Bench did not know about them or did not even understand them. My hon. Friend mentioned in passing that universities might undertake this sort of work if it were profitable, and he went on to say: However, it appears that these university and other institutions have not thought fit to pursue this line of inquiry."—[OFFICIAL REPORT, 19th June, 1968; Vol. 766, c. 1160–1.] I must disillusion the Treasury Bench. The National Institute is carrying out work of this kind, but obviously it is not nearly so well fitted to do it as the Treasury, which is directly involved. Perhaps not everybody unqualifiedly admires the Treasury today. It is able to ignore the revolution in the universities and say that it does not matter, to consider any new field of understanding and call it irrelevant. In these circumstances, one can be forgiven for assuming that its conceit and effortless superiority is a little less convincing now than it used to be.

Perhaps the matter can be summed up by the Balliol undergraduates, who have a certain sympathetic feeling with the Treasury. I should like to quote a verse which I am sure is well known to many hon. Members: First come I; my name is Jowett. There's no knowledge but I know it. I am Master of this college: What I don't know isn't knowledge. In this respect, it sums up the attitude of the Treasury. The scornful remarks made by the Treasury on what can be achieved in this area confirm my worst suspicions of closed minds and narrow attitudes which, perhaps, are responsible for so much that is wrong in our society today.

Mr. John Biffen (Oswestry)

Who was the author of the scornful remarks which the hon. Member has quoted? Which particular intellectual on the Treasury Bench was it who spoke the words to which he rightly takes exception?

Mr. Sheldon

I was quoting from the Financial Secretary to the Treasury.

Mr. Biffen

Not the Chancellor?

Mr. Sheldon

No. I must be forgiven if I am showing rather greater anger than is customary in these matters, but I feel strongly that in an area in which the ordinary private firm spends vast sums of money discussing attitudes on matters in which the control is not complete, it is reasonable to assume that the Treasury could spend a small amount in comparison with the very large amounts that it raises.

I fully understand the normally civilised behaviour of my hon. Friend the Financial Secretary. I hope that he will reflect on how easily he has accepted the Treasury line and I hope that he will consult his own inclinations which, I am sure, would be much more progressive than what he has stated up to now.

That was a particular "beef" which I had to get off my chest. Having suffered in Committee and having seen what I felt to be a sensible solution scorned in that way, I passed a note to the Financial Secretary, who, unfortunately, could not be here today. There is nothing personal in this. In fact, I did expect to have support from my hon. Friend, because I believe that on these matters he is prepared to be far more adventurous than most Financial Secretaries have been in the past. We have seen this in Committee and elsewhere.

One aspect of the Finance Bill to which I would like to refer is the change of tax philosophy. This covers the change of emphasis from direct taxation to indirect taxation. This was shown in both Purchase Tax and the Selective Employment Tax. There was, as we know, a large increase in the revenue from these taxes. When we try to get large increases, we get a large number of anomalies. We get the great difficulty of judging what are luxuries and what are not. We get distortion of choice and, what is perhaps most invidious, we have the position that people have to judge what should be at the higher rate, what should be at the lower rate, what is right to carry a high taxation rate and what is wrong to carry a high taxation rate.

With the rates of Purchase Tax at a low level, the anomalies are relatively easy to bear. With high rates of the tax, we have instances like that of gramophone records, on which we had heated discussions, and the problems which come from categorisation and categorisation coupled with high rates of Purchase Tax.

One thing which I have learned as a result of the Bill is that this essentially is the dilemma of the Opposition. It is they who wish to increase indirect taxes. I find it very unconvincing when they assume that they will get all the benefits of broadening the tax base and all the benefits of a low rate at the same time. If they are to increase the revenue from indirect taxes, what is it to be? Is it all to be at the one rate? Will there not be any exemptions for food? Are the rates of tax for clothing and motor cars to be the same as for furs? That is the problem of the Opposition.

One of the difficulties is that we are essentially a very fair community. This is what raises the problem of Purchase Tax.

Sir C. Osborne

The hon. Member is throwing the blame on to this side of the House as though we were responsible for the Bill. It is his Government's Bill.

Mr. Sheldon

The hon. Member ought to know that it is the policy of his right hon. and hon. Friends to increase the amount of revenue obtained in this way. If they were to increase the amount of revenue, they would run into much greater problems than those which they have criticised continuously throughout the Committee stage.

Sir C. Osborne

Surely, we are discussing the Bill—the Government's Bill —and nothing else. That is where the hon. Member should be directing his attention.

Mr. Sheldon

Certainly we are discussing the Bill. I am discussing the attitude of the Opposition towards the Bill and their remedies, which I see as no remedy but as increasing the difficulties which the party opposite would find if ever they were to implement their ill-thought-out schemes.

Mr. Ridsdale

Does not the hon. Member realise that the one thing about the Opposition which differs so much from the Government is that they do not hold an anti-capitalist view?

Mr. Sheldon

We are well used to the hon. Member's irrelevancies by now.

Our tradition of fairness is one of the great stumbling blocks to a simplified structure. We all feel it indefensible that food should be taxed. We are, therefore, unable to introduce some of the simplified schemes of other countries, because what happens in this House is that hon. Members confronted with an unfair situation try to correct it When we have these instances of unfairness, we are unwilling to ride roughshod over them. Consequently, we get more Amendments to an already complicated Bill and complication grows upon complication to introduce and develop the fairness which we feel to be inherently right. As a result, Finance Bills become too large. This, however, mitigates against the simplified solution.

It is the simplified solution that hon. Members opposite are trying to develop when they call for a broadly-based, simple structure of value-added tax. As soon as they get into the situation of trying to implement that tax, they will see that it is nothing of the sort. They will end up with far greater complexities than anything they have dreamed of and of having to collect more money from the little shop-keepers around the corner who are taking in a few £s a week.

Sir C. Osborne

To which Clause of the Bill is the hon. Member referring?

Mr. Sheldon

One of the problems that we have had in the Purchase Tax discussions on the Finance Bill is that the tax base has not been wide enough. Therefore, we have had to have very high rates and we have had to have differential rates much greater than any of us would like to see. Because of this we have had an increase in anomalies, which always arise when one tries to move from direct to indirect taxation and, at the same time, to take rather more in revenue from these forms of taxation.

When hon. Members Opposite criticise both the Selective Employment Tax and Purchase Tax, they should remember that what they are criticising is indirect taxation. The very criticism which they make will be needed to be directed even more to their own schemes than to the Government's. From the Measures that we have taken this year one lesson that Socialist governments will have to learn is that to remedy injustices requires large sums of money.

Sir D. Glover

The hon. Gentleman has devoted about two-thirds of his speech to what the Conservative Party should do when in power. Can we take it, therefore, that he expects the Conservatives to win the next election?

Mr. Sheldon

I do not know what precise proportion of my speech I have devoted towards demolishing the arguments of hon. Gentlemen opposite. Perhaps some of my anger about the ill-thought-out arguments of hon. Gentlemen opposite, both in Committee and in the House, has finally surfaced this evening.

The lesson that I see all Socialist governments will to face is that to remedy injustices costs a considerable amount of money. This is so, as we have seen this year. With the urge both to raise money and to redistribute it, we will find ourselves faced with incompatible ends, because redistribution, as we are finally coming to realise, is not enough. For this purpose there are not enough wealthy people whom one can tax to give to those who are more deserving. Therefore, what one does in effect, if one believes in a policy of redistribution, as I do, is to take from those whose incomes are above average to give to those who need it rather more. When one goes to those who are above average, we go not only to Labour supporters, but to the broad mass of the people, who, at a time when wealth is not increasing rapidly, object violently both at the ballot box and elsewhere. We need to increase wealth and so increase the proportion of that extra wealth for redistribution. The first requisite of a Socialist Government, and the main task of my right hon. Friend, is to create wealth, not only for the good of the country, but also for the Socialist purposes in which we believe. I think that the action taken by my right hon. Friend will contribute to this end.

8.32 p.m.

Mr. Richard Wainwright (Colne Valley)

I warmly support the eloquent plea of the hon. Member for Ashton-under-Lyne (Mr. Sheldon) that the Government should reverse their hitherto narrow and, at times, flippant attitude towards the need for scientific examination of the effects of taxation.

I referred in Committee to a publication of Political and Economic Planning, which it was suggested might be of use to the late Conservative Administration if they had wished to use it, called "Tax Surveys—Can they help?" The resounding conclusion of that work is that tax surveys have helped in many industrial countries and ought to be widely adopted here.

When one reflects on the vast amount of money which, for instance, is spent in the realm of psychological medicine trying to trace the response of a comparatively small number of people to certain stresses and strains, it is fantastic that, on a matter affecting the vast body of citizens, so little careful research is done.

The Liberals cannot possibly support a Bill, quite apart from its other demerits, of which so many controversial Clauses have not been debated at all and of which other Clauses have not been adequately debated on a proper representative basis. It is no concern of mine how blame should be apportioned between the Guillotine and the obedient silence of Government Members on the Standing Committee, on the one hand, and the extraordinary preoccupation of hon. Members on the Conservative side of the Committee with meal breaks and the exact degree of ventilation. Between the two they have ensured that large important sections of the Bill have not been debated.

Mr. Eric S. Heffer (Liverpool, Walton)

That is strange logic. On the one side, the hon. Gentleman mentions my hon. Friends being obedient and not saying anything and, on the other side, hon. Members opposite speaking on all kinds of subjects. The blame can hardly lie with my hon. Friends who are obedient and say nothing on the Bill.

Mr. Wainwright

Silence is not an effective way of securing adequate debate. That was the point, along with the use of the Guillotine, that I was making, I hoped, to the satisfaction of other hon. Members.

I was glad that the hon. Member for Heywood and Royton (Mr. Barnett) and the hon. Member for Ashton-under-Lyne were quick to indicate their disapproval of the Chancellor's suggestion this afternoon that perhaps in future so-called technical matters could be sent upstairs. This is an impossible distinction to draw, particularly because a Finance Bill usually covers at least five—sometimes more—quite separate specialities.

This year, for instance, a technical committee would have needed specialists on alcohol, on gambling, on life assurance, on Income Tax, on probate and Estate Duty matters, and on special taxes on employment. The idea that any one group of technical specialists can cover all the expertise required for a Finance Bill within the numbers on a Standing Committee is, I think, a delusion. On the other hand, if we could have pre-legislation committees, as has long been the custom in the United States, we could get somewhere in our treatment of tax legislation.

I was surprised to hear the Chancellor explain that there had not yet been time for his Budget and this Bill to have any effect. He spoke of further time being needed for the effects of the Bill to work through. This seems to be almost an admission of incapacity, because for years it has been acknowledged that part of the main craft of constructing a Budget and a Finance Bill is to give immediate signals to which industry and indeed consumers will respond.

We are generations away from the time when people did not take note of taxation changes until they received a demand from the collector. There is no reason why a carefully constructed Budget should not have a drastic and immediate effect on the economy because of the signals it contains, and which most of the financial journals have antennae ready to detect.

The truth is that the signals were confused and misleading. In particular, there was inadequate incentive in the Budget and in the Bill to get import substitution under way quickly enough in the way that it could have been done, and in some other industrial countries has been done brilliantly.

Dealing with unemployment, during the Second Reading debate the Financial Secretary predicted: … we shall see a declining level of unemployment over the months ahead."— [OFFICIAL REPORT, 24th April, 1968; Vol. 763, c. 404.] We are still waiting for his prophecy even to begin to be fulfilled. A Finance Bill which sent out encouraging signals to the industrial community could have made his prophecy come true.

The fact is that the balance between the different kinds of taxation in the Bill has been proved wrong. When talking about balance, I do not make quite the same hard and fast distinctions as the hon. Member for Worthing (Mr. Higgins) seemed to do between direct and so-called indirect taxation. I hope that we are moving away from that rather Edwardian distinction, because when we talk, for instance, of a value-added tax, we are talking of a tax which falls partly on profits, and therefore in the old-fashioned language is direct, and partly on costs, and is therefore indirect. I believe that if the Chancellor, in the way he spelled out the family aggregation principle, had spelled out provisions, for value-added tax to be introduced in the future, even though there was not time for it to be introduced in the current fiscal year, this would have been a useful signal to the industrial community.

Mr. Sheldon

The hon. Gentleman said that the value-added tax was partly a tax on profits. Is it any more a tax on profits than is Purchase Tax?

Mr. Wainwright

Yes, because the payer of Purchase Tax may be making no profits. Someone who is running his business at a loss may be paying as much Purchase Tax as is paid by a profitable wholesaler.

The second feature in which there is a lack of balance in the Bill is the distribution of burden between different parts of our fiscal machinery. It is extraordinary that in this year, with all the symptoms manifest in the spring of a gross overburdening of the Inland Revenue machinery, almost the whole weight of the Bill's innovations are falling upon the Inland Revenue and on those on the taxpayers' side who are opposite the Inland Revenue, whereas Customs and Excise, which has had a relatively easy time in recent years, has been given practically no innovations to introduce.

A value-added tax would have been a splendid and appropriate job for the Customs and Excise branch, which, we are assured, is in very much better trim to take on substantial innovations than is the Inland Revenue.

Mr. Deputy Speaker (Mr. Sydney Irving)

Order. The Chair has given considerable latitude in this debate. I hope that the hon. Member will not continue to refer to the value-added tax, because it is not in the Bill. It has been referred to, but I hope that the hon. Member will not proceed to discuss it further.

Mr. Wainwright

I defer to your Ruling, Mr. Deputy Speaker. I have only one other matter to which I wish to refer, and this time I do so in thoroughly complimentary terms. The spread of S.E.T. concessions to the hotel industry is welcome to my hon. Friends not only for itself but in one case for the remarkable last-minute elasticity which it shows in the Government's administration of the tax. It is not so long ago that we were told that S.E.T. was inevitably tied to precise employment exchange areas, but in the case of part of West Aberdeenshire the House agreed to an Amendment this afternoon which was a notable step forward in more elastic administration. I mention this partly to encourage hon. Members to realise that a little pressure can introduce elasticity into administrative arrangements.

Mr. Higgins

But does not the hon. Member regard it as appalling that whether or not a firm makes a profit depends on pressure of this kind? Is not the only solution the abolition of the tax?

Mr. Wainwright

The hon. Member knows that in this respect the Liberal and Conservative Parties are at one. Whether we are at one in our alternative proposals is a matter into which I should not be in order in entering now. On the point made by the hon. Member, however, I entirely agree.

At long last the Government have been able to detach themselves from the idea of employment exchange areas in toto, and in this case they are actually prepared to extend their concession to so much of an employment exchange area as, at the date of the passing of this Act, comprises the area of a district council or a small burgh. This is at least some advance compared with the previous restrictive attitude.

For the reasons which I have enumerated, I shall feel bound to ask my hon. and right hon. Friends to vote against the Bill tonight.

8.45 p.m.

Mr. R. B. Cant (Stoke-on-Trent, Central)

My right hon. Friend the Chancellor of the Exchequer has had an extremely difficult job. I may be unpopular in saying this, but I want to put it on record that, in my view, his difficulties stem, in part, from the fact of devaluation itself. Most hon. Members —in fact, most intelligent commentators and most of the people—have embraced devaluation as a rather unpalatable solution to our problems. But in retrospect, we shall, I think, find that my right hon. Friend's difficulties stemmed from the fact that he or his predecessor created a situation in which the problem associated with the need to increase exports has thrown considerable tax burdens on the economy. Many of the so-called effects of devaluation in the field of surging exports arise not so much from the price elasticities introduced into the equation by devaluation but rather from the income effect of expanding world trade.

Our experience in 1968 is similar to that in 1950—that expansion is the consequence not of the reductions in prices, but of this expansion of world trade, similar to that associated with the Korean War. Because of this, my right hon. Friend had a difficult Budget to draw up.

His difficulties have been increased because we are slowly but irrevocably coming to the conclusion that the whole problem of demand management in late 1960s is becoming exceedingly difficult. Much of the relevant literature, including the interesting article in Lloyd's Bank Review and a much more learned one in the current Review of Economic Statistics, shows that Chancellors today, in using the Budget for the management of demand in the economy, face problems which make the use of this economic weapon almost outmoded. I must not go into this too deeply, but we should reflect on whether this is enough.

I will make a slight concession to hon. Members opposite by saying that, if we asked ourselves why demand managements by fiscal means is getting more and more ineffective, we would realise that we are not using these techniques in the context appropriate to their success. The whole problem of the growth of liquidity is becoming extremely serious. There is an enormous paradox in that, as world trade rises, the increase in the money needed to finance it rises much more slowly. Yet, domestically, the growth of money is disproportionately larger than the growth of the gross national product which it is financing. I ask my right hon. Friend to ponder that thought.

He had a difficult problem as a consequence of devaluation and the growing ineffectiveness of his contemporary economic tools, but I still feel that the Budget is the right one in global terms and in the balance of taxation which he has chosen. I have not changed my mind about the Budget. When I heard it and took part in the discussions, and listened to the euphoric reaction which was in evidence on this side of the House, I thought that the Budget was about right.

I agree entirely with my hon. Friend the Member for Heywood and Royton (Mr. Barnett) that July is a peculiar month and that Peter Jay, the very eloquent and well-informed young economics correspondent of The Times, has done the country a great service. Earlier, in some of his articles relating to the gold rush and what might happen, he was on rather shaky ground, but this morning he did this country a service, and my hon. Friend the Member for Heywood and Royton was right to bring to the attention of the House some of the sentiments which he expressed.

If the Chancellor had difficulties in framing his Budget, he will certainly have difficulties in the months ahead. He will be squeezed between the upper and nether millstones—between those who, whatever was said by the right hon. Member for Enfield, West (Mr. Iain Macleod), will ask for more deflation as imports begin to grow, for that is a school of thought in this country, and those of my hon. Friends below the gangway who will plead with him, as unemployment rises, that he should reflate. He may have had problems when he formulated the Budget. He will have other problems in the future.

As a contribution, perhaps, to positive philosophy, I suggest to my right hon. Friend the Chancellor that he produced a good Budget. He will have difficulties as the economy unfolds. We cannot expect the fruits of devaluation in two years. It took the French five. My advice to my right hon. Friend is, "Sit tight".

8.53 p.m.

Mr. Biffen

I feel that in his absence I should apologise to the Financial Secretary to the Treasury because in an earlier exchange with the hon. Member for Aston-under-Lyne (Mr. Sheldon) I referred to him as an intellectual, and that is an abusive term. I have such a respect for the entrepreneurial skill and success of the Financial Secretary to the Treasury that I should not like it to go on record unconnected that I deprecated him as an intellectual.

My hon. Friend the Member for Shipley (Mr. Hirst) who, a week ago, very pertinently asked the leader of the House whether we could have a debate on the deteriorating economic situation, was assured by the Leader of the House that the Finance Bill debates would dominate most of this week's proceedings. In fact, the Leader of the House said, The hon. Member will remember that next week we are debating the Finance Bill. No doubt he will make a contribution."—[OFFICIAL REPORT, 27th June, 1968; Vol. 767, c. 819] We are very grateful indeed that in opening the Third Reading debate the Chancellor gave a fairly generalised account of the situation as he saw it and as he related it to his Budget. Perhaps it was rather a generous interpretation of Third Reading, although I must confess that the most generous interpretation of Third Reading was that of those hon. Members who discussed whether the Bill should be debated up- stairs in Committee or on the Floor of the House. I will make one brief comment on that. Incarcerated upstairs was the hon. Member who is my regular "pair" and that had a most debilitating effect on my social life.

The massive sum being additionally raised by the Bill, and particularly by Clauses 1, 2, 4, 5, 8 and 13—amounting in all to £923 million of additional taxation in a full year, to which my hon. Friend the Member for Worthing (Mr. Higgins) referred—has been the subject dominating our discussion tonight. It is being raised in the context of what the Government call their strategy to make devaluation work. This was, after all, the justification presented by the Chancellor when he sought to raise this sum. This strategy, and the unfolding of it in tactical terms, lies at the heart of the Bill.

That some of us may have doubts about both the strategy and the tactics hardly deserves the designation of Jeremiahs, the term used by the hon. Member for Heywood and Royton (Mr. Barnett), for even his inseparable hon. Friend, the Member for Ashton-under-Lyne admitted that in the past there had been some doubt about the timing of the Government's economic measures. It is precisely the timing and the sequence of events since devaluation that lie at the heart of a great deal of the controversy surrounding the Bill and the sums sought to be raised by it.

The original decision to move from one fixed rate to another was extremely unwise. It was, I fear, a missed opportunity to move to a floating rate. This is an aside because I wish to discipline myself to speak about what is in the Bill; but I regret that no references are made to floating rates, to increasing the price of gold or, indeed, to other desirable changes.

The confidence factor was vital to the whole strategy of devaluation. Once we had moved to the new fixed exchange rate, then the whole argument was that we would have a recovery in the balance of trade of a sufficient magnitude to enable the consequential and sought-after improvement in the balance of payments to proceed, free from the raids of speculation. The Chancellor waxed eloquent on this point and I must quote some of his words. [Interruption.] I appreciate that his words may distress hon. Gentlemen Opposite, some of whom find his strategy as unacceptable as I do.

Mr. Dickens

For different reasons.

Mr. Biffen

That is why we are on different sides of the House and are long likely to remain so, except that the likelihood of political survival, in electoral terms, for right hon. and hon. Gentlemen opposite is in doubt. The Chancellor said: No Chancellor can begin to guarantee success. But I believe that I have done what is necessary here at home to give us a high chance of achieving it. There is now no rational cause for the British economy not going forward to strong success. Our exchange rate is one that makes us fully competitive. A little later he said: In a rational world this should give us the firm prospect of a secure balance of payments and steady growth at home. Even"— and this shows the confidence he had in his measures: in an irrational one it gives us the great advantage of being able to speak with the knowledge that our own house is in order. And the voice in which we shall speak will be one of sanity …"—[OFFICIAL REPORT, 19th March, 1968; Vol. 761, c. 301–2.] The whole point about the confidence factor which is implicit in the devaluation decision is that it has not emerged. There are plenty of arguments for saying that there are good prospects for improvement in the trade balance. It is perfectly true, for example, that the latest report from the Ministry of Technology on the index of engineering export orders shows an increase of 15 per cent. in terms of volume for the past three months over the preceding three months. No one argues—at least, I do not—that there are not very real tangible prospects of improvements in the balance of trade, and that to some extent they are being contributed to by this Bill. But I say that the confidence factor which the Chancellor of the Exchequer also argued would be encouraged by this Bill have not emerged. This is immensely serious because it could completely undo the strategy of devaluation as events have undermined the strategies of so many other policies which were supposed to lie at the very heart of the Government's management of the economy.

In this context of the timing of devaluation and dribbling out of the accom- panying deflationary measures I want to quote from a private paper circulated by a most eminent economist—Professor Victor Morgan. I will quote from it only very briefly, but it deals with changes in stocks, a point of immense pertinence. After referring to changes in stocks during the first quarter of this year, Professor Morgan says: The composition of the over-all figure is even more interesting. Wholesale stocks went up by £15 million and retail stocks by £46 million (the biggest rise since 1960) while those of manufacturers fell by an unprecedented £115 million. The rise in wholesale and retail stocks is no doubt a reflection of the consumer boom and of the desire of distributors as well as consumers to 'beat the Budget'. The size of the fall in manufacturers' stocks is surprising in view of the attempt to explain the high level of imports by reference to a building up of stocks of imported goods. Unless de-stocking of domestic goods was fantastically large there cannot have been much stockbuilding of imports. In other words, we have seen a rise of imports largely reflected in consumer goods, and industrial re-stocking which has to come on a post-devaluation situation in post-devaluation payment terms. In this situation I do not foresee being borne out even the optimism that the Chancellor of the Exchequer today expressed about the balance of trade.

In precisely these circumstances we begin to understand that whatever confidence he may have had in the prospect of improvements in the balance of trade being able to see us through the next few months, people outside this country do not see them at all in that way. They do not see things moving in such a way as to lead to a restoration of confidence when there are so many factors at work in the world which would in any case undermine confidence—and the Chancellor of the Exchequer referred to one when he spoke of the French import restrictions.

There are implications immediately related to Clause 10, which deals with the the use of the regulator. I should not like it to be thought that there is not one voice in this Chamber which even now does not advocate an increase in indirect taxation. I argue that in the circumstances it is still necessary for the Chancellor to be ready to use his power—and, in my view, there is ample evidence that he may have to use it shortly—to increase indirect taxation given to him under Clause 10 of this Bill. This is my analysis and my view. It flows from the quotations I have made from Professor Morgan's analysis. I do not expect hon. Members opposite to agree because I know that they want to talk about restricting portfolio investments and import controls. How they will relate that to what is in the Bill is always a challenge, but my deflationary argument is both consistent and related to the Bill.

Of course, I accept that this is a very imperfect situation because the real alternative is substantial significant reductions in public expenditure. In arguing for the use of Clause 10 I am arguing only that this is a vital factor if we wish to preserve foreign confidence in sterling and to avoid being driven into import controls or into portfolio regulations on overseas sterling, both of which have been explicitly rejected by the Chancellor within the last few days.

Mr. Dickens

The hon. Member is noted for his integrity and straightforwardness. He said that the Government should make further cuts in public expenditure. Will he tell the House in what he thinks those cuts should be? Should they be in the increases which have taken place, or in absolute terms?

Sir C. Osborne

That is not in the Bill.

Mr. Deputy Speaker

I think it would be out of order if the hon. Member for Oswestry (Mr. Biffen) followed that supplementary question.

Mr. Biffen

If I may, I refer the hon. Member for Lewisham, West (Mr. Dickens) to an article which appeared some time ago in the City Press in which I have elaborated my views on public expenditure. It is a matter of major political embarrassment which I am sure will find its way into Labour speakers' handbooks. I have elaborated whole areas of public expenditure in which I think cuts could be made.

Sir Knox Cunningham (Antrim, South)

Does my hon. Friend agree that cuts in public expenditure will never be made by this Government, and that the sooner the Government get out the sooner we can succeed in getting cuts and getting our economy right?

Mr. Biffen

It would be a bold man who disagreed with my hon. and learned Friend the Member for Antrim, South (Sir Knox Cunningham).

Sir S. Osborne

And it is not in the Bill.

Mr. Biffen

That also is not in the Bill.

I think everyone appreciates that it is courageous for any Chancellor to seek to raise the unprecedented sums of money which the right hon. Gentleman is raising in the Bill before us. The fact is, however, that the overall strategy was to provide confidence and would be the final act in the devaluation drama, that our balance of trade would show such tangible prospects of improvement that the other confidence factors would then disappear. This has not happened and the fact that the Chancellor in speaking this evening did not address himself to this aspect, this most real and frightening aspect of the situation, is immensely disturbing.

The Chancellor is a very experienced parliamentarian but I think that this evening there were all the signs that his customary urbanity had shaded into complacency. We have had this situation all too often in the past. It gives me no pleasure partly to endorse at least and call for increased indirect taxation, but anyone who believes that this Budget and what it contains, and this Bill and what it contains, are enough to see us through the next few months is, I think, taking a gamble. It is a gamble which is unjustified and is characteristic of this Government.

9.10 p.m.

Mr. Dickens

Before dealing with the Bill, I want to make a few remarks about the proceedings in Committee. I am one of those who believe that it was a wise decision to send the Bill to Standing Committee. I deplore the fact that the Opposition made such unintelligent use of the time available to them. It is the duty of the Opposition always to oppose, but it is a standing reproach to the Tory Opposition that we have not had time, either in Committee or on the Floor of the House, to debate the only radical provision in the Bill which affects the wealthy, namely, Part IV on the special charge.

One major reason for that is that we spent rather more than eight hours on Committee discussing a succession of footling, childish points of order concerned with whether Members should sit in shirt sleeves, whether there should be two or three fans on, whether the postal services were adequate, and so on. I hope that, in future years, when the Bill goes to Standing Committee, the facilities available to Members can be improved. However, hon. Members opposite make poor use of the time available if they concentrate for the first day or two in Committee on such trivial matters as those which I have enumerated.

The right hon. Member for Enfield, West (Mr. Iain Macleod) is one of the ablest and more ambitious politicians in the House and he opposed this procedural reform. He was peeved, because the Bill being taken in Standing Committee kept him from the Floor of the House and denied him the publicity which he would have received here. Further—I say this to the right hon. Gentleman with great respect—he has met his debating match in my right hon. Friend the Chancellor of the Exchequer. This may explain some of the extremely uncharacteristic remarks which the right hon. Gentleman made, some of them very rude, some of them very arrogant, some of them very offensive, in attacking my right hon. Friend the Chancellor in Committee. I hope that, on reflection, the right hon. Gentleman will see fit to withdraw some of the remarks he made in Committee.

I do not agree with my right hon. Friend the Chancellor that we should debate simply the technical Clauses in Committee and debate the so-called wide-ranging, non-controversial Clauses on the Floor of the House. I want to see either one thing or the other— either the Bill taken in a Standing Committee composed of people who are basically interested in this subject, or the Bill taken in Committee of the whole House.

Throughout this debate there has been considerable discussion about the proceedings in Committee. Hon. Members on both sides have taken the opportunity, under the generosity of either Mr. Speaker or Mr. Deputy Speaker, to discuss wide-ranging aspects of Budget strategy and of the Budget. I intend to follow suit. Thus, I want to make some comments on indirect taxation and on the special charge.

I strongly take issue with the prevailing trend of opinion expressed in the debate that what the country needs above all else is a move from direct to indirect taxation. People who argue this case live in a world of cloud-cuckooland. At present, most people earning between £600 and £2,500 per annum—many surveys bear this out—devote about 28 per cent. of their income, at that level and at higher levels, to taxation in all forms. This means, in effect, that the progressiveness of Income Tax has now largely been overtaken by the regressive-ness of indirect taxation, and indirect taxation, especially the Purchase Tax and the increase in the Selective Employment Tax, bears most bears most heavily on those least able to pay.

It was for this reason, because two-thirds of the increased taxation provided under it is indirect and thus regressive that the T.U.C. condemned the Budget for placing additional burdens on working people. Moreover, the Government have increased the Purchase Tax, for example, on necessities to 12½ per cent. We as a party—I remind my right hon. Friend of this—claimed at earlier general elections that we stood for the abolition of the Purchase Tax on essential items. I very much hope that we shall return to that position. I am not arguing a case against all forms of indirect taxation. One must be highly selective. One must clearly differentiate between taxation on luxury items and taxation on essentials.

I turn now to Part IV of the Bill and the special charge. In my view, the special charge is the best element in the whole Bill. At long last, it makes some attempt in this country to come to grips with taxation of capital. Just in case right hon. and hon. Members opposite have any doubt about the views of my right hon. Friend the Chancellor, it may be instructive to remind them and the House of some of his earlier words in this connection. In earlier days, my right hon. Friend was accustomed to contribute to Tribune. In 1951, he penned not an article but a pamphlet for Tribune entitled "Fair Shares for the Rich". I mentioned this the other day to my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot), and, with his characteristic chuckle, he said, "Yes, I remember it. I devised the title for it, and a jolly good pamphlet it was". The very first sentence of that pamphlet read: Perhaps the greatest evil of capitalism is the gross maldistribution of wealth, both capital and income, to which it has led. In 1953, the present Chancellor of the Exchequer, in a subsequent publication, his essay on wealth in the "New Fabian Essays" of that year, said: Capital taxation is an attack on the roots of inequality and not on its surface manifestations. It must play a large part in the fiscal policies of future Labour Governments. I hope that right hon. and hon. Members opposite will take cognisance that this year the special levy is, as it were, simply a preliminary reconnaissance in this field. There is ample need for it. In 1938, when Mr. Neville Chamberlain was Prime Minister, of all the tax revenue coming into the Exchequer about 6.4 per cent. came from taxation of capital through Estate Duty. In 1968, 30 years on and after three decades of war taxation and welfare economics, the proportion has fallen to just on 3 per cent.

When the right hon. Member for Enfield, West calls, as he did in Committee, for a broader base for taxation, I put to him, and to my right hon. Friends in the House, that the very first requirement is not to increase indirect taxation but to put much higher taxes on capital and on wealth, for that source is in this country grossly under-taxed at present. Not only is this true in comparison with the past in Britain. It is true also by comparison with virtually every other advanced industrial country of Western Europe.

Mr. Speaker

Order. In this debate, the hon. Gentleman cannot seek to amend the Bill.

Mr. Dickens

I am not seeking to amend it, Mr. Speaker. I am merely giving my views on the attractiveness of Part IV and making some exploratory suggestions for future action. I make the point in passing that on Part IV, the special charge, my right hon. Friend has my enthusiastic support, and I hope that he will regard this as a sufficient inducement to proceed further next year.

On Part V, dealing with the Selective Employment Tax—

Sir C. Osborne rose—

Mr. Dickens

I shall not give way— not this evening and not to the hon. Gentleman. We are having a serious debate.

On Part V, dealing with Selective Employment Tax, I make the point in passing to my right hon. Friend that many of us were much disappointed that a unique anomaly affecting a vital British industry, book publishing, was not remedied in the Bill. It was not remedied on Report, as we had thought that it might be. I very much hope that when the country's economic conditions are easier we shall see that the Selective Employment Tax is removed from book publishers, because at present they are in a totally anomalous position.

Mr. Speaker

Order. It is not removed in the Bill, and we must wait for another Bill to talk about it.

Mr. Dickens

I am grateful to you for reminding me, Mr. Speaker, and I pass to Part VI, dealing with National Savings.

The time has come for a complete review of the whole rôle and function of the National Savings movement. We should look toward a position in which it is raising savings at an appropriately higher rate of interest, much higher than the Post Office Savings Bank or other forms of national saving are at present allowed to pay. I am encouraged by my right hon. Friend's remarks yesterday that he is making a review of National Savings and the opportunities for newer forms of savings.

Earlier tonight my right hon. Friend referred to his overall Budget strategy. My views on it are well known. I am totally opposed to the Government's present Budget strategy and to most of the main elements of their economic policy. I say that because I believe that the advantages the country could obtain and can still obtain from devaluation, which was a right and necessary step to take last autumn, are being squandered by the Government's failure to take certain additional steps.

The Budget is part three of the steps that followed from devaluation. We had the immediate measures after devaluation, which took £750 million out of the economy; we had the January statement of my right hon. Friend the Prime Minister, which cut public expenditure this year by just over £325 million; and we had a Budget which takes £775 million out of the economy in this financial year and £923 million in a full year.

The time has come totally to reappraise the country's economic strategy and the strategy of my right hon. Friend's Budget. I do not say this because I believe that the strategy does not have a chance of success. I think that it has, but the odds are overwhelmingly against us. The international climate is such that the pound is totally over-exposed, as a reserve currency and a trading currency. It is subject to every conceivable strain at home and abroad. If the girls in the Folies Bergères go on strike there is a run on the pound. We must get away from this situation. We must take steps without delay to stop this exposure of our currency, which other people are using to suit their trading convenience at great detriment to this country, by first reimposing the exchange controls that the party opposite—

Mr. Speaker

Order. We must keep to the Bill. We are discussing what is in it. We can denounce it, but we cannot make all sorts of other suggestions—not on Third Reading.

Mr. Dickens

I much respect your Ruling, Mr. Speaker. I simply draw attention to the fact that earlier speakers had the opportunity that I now seek to discuss the wider Budget strategy. My righ hon. Friend did so in his introductory remarks, and other Members have done so. With your approval, I hope that I may conclude by making one or two brief references along those lines.

I want to see my right hon. Friend protect the currency along the lines that I have argued in earlier debates. I want to see him taking steps to mobilise our immense resources abroad by liquidating our portfolio investments in North America and using them to buy at the more volatile short-term investments. I want him to pay attention to the steep rise in imports in the first quarter of the year. The rise in the volume of imported manufactured goods was 15 per cent. above that for the first quarter of 1957. We should attend to this.

I know that my right hon. Friend is giving these matters urgent and anxious attention, and I hope that he has found the constructive proposals put forward by a number of us on this side of the House, with the full support of the trade union movement and with the support of a wide and growing volume of opinion in the universities and the Press, ones to which he will turn his attention without delay.

My hon. Friend the Member for Heywood and Royton (Mr. Barnett) said there seemed to be building up almost an annual July crisis. It is well known that the Government are currently involved in international negotiations to obtain a long-term loan to fund the short-term sterling balances. That to me is a very much fourth-class alternative to the ideas we have put forward. If there is any question of the Chancellor coming before the House with proposals that he has been induced to adopt as a consequence of obtaining this loan which will result in further deflationary measures, he will meet with the most vigorous opposition from these benches and, I think, the entire House. The time has come for the Government to stand resolute and oppose any suggestion that those proposals should be adopted.

I hope that the Budget this year will be regarded in a sense as the last of its kind in that it has far too many proposals which are characteristic of the Conservative Party. In another way I hope it may be regarded as the first of its kind because it genuinely tries to get to grips with some social inequalities through the special charge, and in that I wish my right hon. Friend all success in his future endeavours.

9.28 p.m.

Mr. Michael Alison (Barkston Ash)

I am not sure whether to react to the speech of the hon. Member for Lewisham, West (Mr. Dickens) in anger or in sorrow. I was rather angry when he spent the greater proportion of his speech criticising our criticism of the Committee stage being held upstairs than we spent up there criticising it. The hon. Member spoke of eight hours. I carefully timed the proportion of his admirably compact speech which he devoted to his criticisms of our conduct in Standing Committee, and it was an immeasureably greater proportion of his speech than our criticisms levelled in the Standing Committee represented.

I am pre-eminently sorry for the hon. Gentleman about two things which are important to him. One is direct taxation, which is progressive as opposed to indirect. His right hon. Friend has told him that we have reached the end of the road there, and so there is no golden prospect in that direction.

Mr. Dickens

Who said it?

Mr. Alison

The hon. Gentleman's right hon. Friend has just given a most interesting interview on Grenada Television about the limit possibly having been reached—he agreed with the commentator—in direct taxation. As to the red meat of the special charge, I feel sorry for the hon. Gentleman about this. It is once-for-all charge. He will never get another chance. So the hon. Member has had it in every direction.

I want to chime in with my hon. Friend the Member for Oswestry (Mr. Biffen) in echoing the feeling that the Chancellor of the Exchequer has sounded a note of complacency. He has given the impression that the Bill is a fully rigged ship, carrying a good deal of canvas and ploughing steadily on, in spite of some very rough weather, and she is on course.

If we look at the situation in slightly greater detail, we find that there is a good deal less ground for complacency or encouragement. I thought that the most interesting, most tell-tale, give-away point of the Chancellor of the Exchequer was his indication that the level of consumer expenditure by the end of the first half of this year would be running at roughly the same level as it was at the end of the first half of 1967. This is a staggering indictment of the success or failure of the Government's policy.

Let us consider the steps which the Government have taken in their massive attempt to make room for the shift of resources to exports. Since the middle of 1967, we have been in a period of unprecedented emphasis on incomes policy. There were the hire-purchase charges on car prices in November. We have had the biggest tax raising Budget in peace time—we are discussing it now. There were the bank lending restrictions at the end of May, which were incidentally, substantially later than the introduction of the Budget. We have had devaluation, with all the implied effects on import prices and the checking of consumer expenditure. In spite of all that, the Chancellor says that we shall have just managed to reach the level of consumer expenditure which obtained in the middle of 1967. If this is an indication of a successful Budget strategy, then it will not get us very far. This gives the impression that we have simply had a string of unco-ordinated, ad hoc emergency measures unrelated to one another.

The Chancellor spoke, admittedly, about what he described as the time lag. But one of the curious features of the Bill is that there is in it and the proposals for tax changes an entirely irrational yet purpose-built time lag. If we consider the impact of the fiscal measures which the Chancellor has introduced, we find that they spring up at different times in the coming financial year, and usually in the wrong order from the strategic point of view. In the Inland Revenue category of the taxes he is raising, the immediate impact of the Inland Revenue measures is on the corporate sector. The first people who will be bitten are the companies upon which our future depends and which are immediately landed with the extra £100 million.

The reduction in the personal allowances, worth about £83 million to the Chancellor, is entirely offset by the increase in family allowances. The special charge has no effect on consumption. It is entirely a capital debt. It will be paid out of capital and will have no effect on consumption. On the Inland Revenue side, the first bite of the Bill is on the corporate sector. Is this the sector which we should clobber in the Budget? These are the people who will feel the cold wind of the Budget first.

The same thing applies in connection with Customs and Excise. Admittedly Purchase Tax bites early on the consumer, but hydrocarbon oil charges have at least an equal effect on commercial undertakings. With regard to the motor vehicle licence decision—one of the major items meant to hit the consumer—my guess is that it will not start bringing in extra revenue until very late in the year because I imagine that as a result of the warning which we were given before the Budget a great many people bought and licensed new cars before 19th March. The increase in vehicle licence charges will probably take effect right at the end of the fiscal year. That will mean another big delay.

The same applies to the Selective Employment Tax. It will hit early and will not come into effect until September. Again, the consumer tends to be let off lightly. The more we look at it, the longer the time lag becomes. But it is in the wrong direction. The cold wind will blow on the consumer late and on the corporate sector much too early.

The Corporation Tax will hit the productive sector of the economy. The Selective Employment Tax, whether on the service industry or indirectly—and there is a major indirect effect upon manufacturing industry—comes in as another feature on the productive side of industry. The Customs and Excise taxation will have its effect on commercial undertakings, which will be affected also by vehicle licence taxation. The real burden will be borne by the corporate sector, which is the one sector that we should try to help.

I remind the House that the crucial thing for the prospects for exports is not the success or otherwise in keeping price levels steady for exporting firms, because I believe that there is a good deal of flexibility in what overseas buyers are prepared to pay or to buy. The real issue is the modern ideas, new techniques and the new investment which goes into manufacturing industry, producing new kinds of machine tools, new styles and designs of commercial vehicles, and so on. It is investment in manufacturing industry which will suffer from the heavy impost on the corporate sector of the economy.

I reiterate what my hon. Friend the Member for Oswestry (Mr. Biffen) said in quoting Professor Morgan. Exactly the same point is made in the June Monthly Summary of Business Conditions by "The III Banks", from which I quote: Industrial investment increased 2 per cent. in the first quarter, according to provisional estimates, with increases in the distributive, service and shipping industries"— a perverse outcome to the application to S.E.T. and to investment incentives for manufacturing industry, one might add in passing— but a further decline in manufacturers' investment. Estimates for stockbuilding show an increase for wholesalers and retailers, more than offset by a further fall in the volume of manufacturers' stocks. We have, therefore, exactly the opposite effect of what the Government should be seeking to achieve—a continuing decline in manufacturing estimate, a perverse rise in the investment in service and distribution industries and the consumer let off until relatively late in the fiscal year, by which time we may well have missed what might be called the spring tide for selling overseas.

We must not forget that even more important than devaluation and the effects in France following the difficulties in that country is the coming into effect on 1st July of the new common external tariff of the Common Market, which means that the Germans at least will be putting up their tariffs against us in some of our most important sectors.

9.37 p.m.

Mr. Orme

I shall be brief but, having listened to most of the Third Reading debate, I wish to deal with a point concerning the Budget strategy, the strategy of my right hon. Friend the Chancellor of the Exchequer and the Bill itself. Before doing so, however, as most other hon. Members have appeared to refer in passing to the passage of the Bill in Committee upstairs, I think it is fair to say, as a member of the Standing Committee and as one who has advocated that the Finance Bill should go upstairs, that although during the first few sittings of the Committee I was sceptical about whether the arrangement would be a success, I have come firmly to the conclusion that the Finance Bill gets more detailed examination upstairs than it ever does on the Floor of the House.

Mr. John Smith (Cities of London and Westminster)

The hon. Member was hardly ever there.

Mr. Orme

The hon. Member for the Cities of London and Westminster (Mr. John Smith) is the last person to question me on this, because we could go into great depth about his contributions upstairs. I agree that many things want changing in the conduct of the sittings, but the right hon. Member for Enfield, West (Mr. Iain Macleod) should not take it that he is playing in the second eleven because the Bill has been sent upstairs.

The attendance of hon. Members in Committee and the basic and fundamental issues that we discussed showed the division which existed between the parties, and the debates went into great detail. I feel that my right hon. Friend the Chancellor of the Exchequer, uncharacteristically for him, has already taken fright and announced basic alterations in his thinking about what might happen next year. With my hon. Friend the Member for Heywood and Royton (Mr. Barnett) and many other hon. Members who served on the Committee upstairs, I hope that my right hon'. Friend will give another year to the Finance Bill experiment upstairs. In consequence, we feel that if we set out with a timetable we could properly discuss these matters.

Mr. Speaker

Order. We cannot debate the procedure for next year's Finance Bill.

Mr. Orme

I appreciate that, Mr. Speaker, but this was mentioned by the hon. Member for Worthing (Mr. Higgins) and some of my hon. Friends. Therefore, I wanted to refer in passing to this year and perhaps draw some conclusions for the future.

The basic problem with which I want to deal, arising from the Budget strategy, is unemployment. Some of my hon. Friends have dealt with other aspects. I agree particularly with many of the suggestions and criticisms put forward by my hon. Friend the Member for Lewisham, West (Mr. Dickens).

The Chancellor has taken £923 million purchasing power out of the economy. This is already beginning to take effect. I accept that S.E.T. has not yet started. Nevertheless, it is beginning to bite.

Exports are increasing at the present time, but, for some reason, unemployment is rising. I speak now from an industrial point of view. There is great concern in the country about the manner in which unemployment is not just sticking but is rising. I was alarmed the other day to hear Mr. Aubrey Jones, at a Press Gallery lunch, talking about the Chancellor's strategy and Budget, refer to the fact that, for the first time in modern history, this country had a position where unemployment was rising but production was rising at the same time. He seemed to welcome this fact. In other words, he welcomed that we should have a higher level of unemplopment. This, to me and to many of my hon. Friends, is completely unacceptable. If we cannot envisage a strategy whereby we can move back to full employment, we must find other ways of running our modern industrial economy.

What does my right hon. Friend envisage as the prospect for unemployment during the coming autumn and winter months? When we have got rid of the seasonally adjusted figures, will unemployment rise beyond 600,000 or 700,000? I believe that this is of paramount importance to the economy. This is not a question of, as it were, crying scared before the event. It is looking at the event as it is happening reading the figures before us. As each month's figures for unemployment come out, one sees that they are rising. I am very concerned about this.

If, as has been stated, we are taking out over £200 million—I think that was the figure quoted during the prices and incomes debate—this will have a severe deflationary effect. What will then be the added effect of S.E.T. in the autumn?

I know that my right hon. Friend the Chancellor must be concerned about this. I know also that his right hon. Friend the Prime Minister today, in the House, said that we must get full employment through the export-led boom and it would be no boost to the consumer industry to achieve the reduction for which some were pressing in the House earlier. That might sound all right, but some industries are not affected by the export-led boom. There are areas in this country that are still basically finding that unemployment remains difficult to remove.

I am deeply concerned about this situation. I know that my friends in the trade union movement are unhappy that this is happening in the middle of the summer. I urge the Government to give the matter the most serious consideration and to take the necessary steps to deal with it before things get any worse, because we foresee an extremely serious situation developing by the winter. If the strategy adopted by my right hon. Friend to bring about a reduction in purchasing power, which he hopes will in itself restrict the purchase of imports, does not work, he will have to take other measures which most of us have been advocating, instead of allowing unemployment to increase.

9.45 p.m.

Mr. Iain Macleod

At an appropriate point in what will be a short speech I shall make some reference to the extremely interesting point which the hon. Member for Salford, West (Mr. Orme) made about unemployment. He knows that I share his anxiety about this matter.

The Motion before the House is, "That the Bill be now read the Third time". One is tempted to ask, what Bill? We had to pass a special Motion this afternoon, contrary to our custom, to enable us to discuss a Bill which does not exist. The latest copy which I have has, for example, an interesting Clause 50 entitled, "Provision for a National Lottery", but the only Clause which was put to a free vote of the House was appropriately rejected and, presumably, will not appear in the final version of the Bill. We also this afternoon, at high speed, put in about 100 Government Amendments, and much of the Bill, including, in particular, one Schedule to which I shall refer, is not before the House. All this concentration is to meet the traditional deadline of 5th July, for today is, of course, the 4th. I have always thought that the Chancellor was wrong to attach any particular importance to this date, and I think it has now been shown that it is not a necessary part of our affairs.

I hold the view that the most boring of all debates are those in which Guillotine battles are fought all over again, and I propose to make very little reference to the question of who was to blame in this matter. The hon. Members for Heywood and Royton (Mr. Barnett) and Ashton-under-Lyne (Mr. Sheldon) have a simple answer. They say that it is my fault. I can never be sure whether the heavenly twins are really very simple people or whether they are very clever people who constantly affect simplicity. I suspect that it is the second of the two, but, if they will allow me to make one observation, it is that both of them came into the House in, I think, 1964, they have therefore only had the experience of sitting on the Government benches during Finance Bills, and as in the nature of things unhappily they will not be with us in the next Parliament, their education will remain somewhat incomplete.

It is a matter which, as a former Leader of the House, I have always taken a great interest in, and I respond to some'thing the Chancellor said earlier. I invite the House simply to consider for a moment one Clause and one Schedule. I refer to Clause 16 and Schedule 9. The Chair upstairs selected no fewer than 36 Amendments on this entirely non-controversial Clause and this equally non-controversial Schedule. I was horrified, but the Chair and its advisers were right. There is no question about it, and it is very difficult to see how even into a Guillotine timetable one can fit sensible discussion of that length. The discussions took the whole of a day and the whole of a night and, as a result, the Schedule was entirely rewritten and over 50 Amendments to it were put before the House this afternoon.

It is clear that we ought at least to look at special methods of considering Clauses and Schedules of that nature. It does not matter what solution we come to, but that sort of procedure—which was wholly right; the Chair both downstairs and upstairs was entirely right in what it did— cannot be tortured into a normal Committee such as we have upstairs or downstairs. My view, as is known to the House, is that the right and best solution is that all stages should be held on the Floor of the House. Nevertheless, I would wish to study what the Chancellor said today, because on Clauses like that which I have indicated—and there are some others—I can see a genuine case for special treatment, which might take the form of a division of the Bill. I do not want to go beyond that now. I will study the Chancellor's exact words in HANSARD.

Many recent Finance Bills have become quite irrelevant by the time they reached the Third Reading debate or, at any rate, the Recess. That was true of the 1966 Bill, which was completely overwhelmed by the measures of 20th July. It was true of the 1967 Bill, when "Steady as she goes" turned out to be a journey towards the rocks of devaluation. This Finance Bill, to which, if the House agrees, a Third Reading will be given tonight, has more relevance—and that would not be difficult—than any of the previous Bills that we have had to consider.

Yet my view of it and of the Chancellor's Budget statement remains basically the same as when I first spoke after him. I have consistently been less optimistic than he has, as he knows, and I would argue that all the developments—the new forecasts of the National Institute and the Chancellor's hedging this evining—make it clear that events have come closer to the view that I put before the House at the time of the Budget and the Second Reading debate than the view of the Chancellor.

The Chancellor misunderstands the point that we have made to him about forecasts. It is an excellent thing to make forecasts; it is absurd to be bound by them and to try to torture events to fit a forecast that has been made. If one makes a forecast in the great field of economic affairs with which the Chancellor deals and it comes out right, almost certainly it is an accident; almost certainly it is a combination of two or more errors cancelling themselves out. This is not an argument against making forecasts. In passing, I have always thought that the error of the National Plan was that it attempted to be precise about 1970 but was vague about the years until we got there, whereas any ordinary business forecast does exactly the reverse; it is precise about what is to happen in the next weeks or months and vague as the years go on.

The Chancellor seemed to think that there was something wrong in adjusting a forecast. On the contrary, I think that he should constantly adjust it, because if he does not he will torture events to make them fit the forecast.

I want to refer to two points, both of which the Chancellor mentioned and both of which I mention only in passing, because we may have an economic debate and it would be more appropriate to develop these points then. The first is the question of unemployment, to which the hon. Member for Salford, West referred. After some pressing the Chancellor told me that he expected the trend of unemployment to improve.

In each of the four months since then, the situation has got worse. We are now, with the June figures, perhaps at the peak of employment. It rather depends upon when the Scottish school leavers come in as to whether July will go higher. August certainly will. So the gross figures will increase almost from now on, with the possible exception of July. But what is more significant still is not just that the June figure is the worst since 1940, but that, seasonally adjusted, the wholly unemployed figure now, in June, is slightly higher than even the peak at the winter time of the 1963 figures and is perhaps the highest figure, except for peaks like a fuel crisis, since the war. It is this that worries the hon. Member for Salford, West.

Of course there will be something of a lift in exports, and this will help the unemployment situation, but there are, in my judgment, three factors which must be considered on the other side. There is the question of pit closures, there is the effect of the Budget, which has not had its full effect yet, and of course, there is the effect of S.E.T. in the autumn, which, in certain fields, can have a dramatic effect, as we know so well, upon unemployment. I leave that with an expression of anxiety, and will develop it further if we have an economic debate.

The other matter to which the Chancellor referred is the export-import balance. He now thinks that he will probably get at least his main forecast and that he may get his higher forecast. I think that that is a fair way of putting what he feels about exports, although exactly what it will mean in terms of new foreign currency coming into this country is not completely clear. But I have little doubt—again, I merely make the point and leave it for debate—that the propensity to import was considerably higher than the Government ever thought, and perhaps higher even than anyone ever thought. To that extent, the balance which they have been seeking between exports and imports is unlikely to be achieved.

it is for this reason that the Chancellor's forecasts for the second half of the year and for 1969 have been increasingly suspect, particularly from this side of the House. My hon. Friend the Member for Oswestry, (Mr. Biffen) was exactly right in what he said about the question of a re-stocking boom, for various reasons. That may still come.

I turn from the right hon. Gentleman's general point just to pick out one other. I want to elaborate the point made by my hon. Friend the Member for Worthing (Mr. Higgins), who referred particularly to the Chief Secretary, who I thought, in these debates, was the star of the Treasury team. We disagreed a good deal with him, but we were grateful for the way that he answered the debates. His hon. Friend the Member for Chislehurst (Mr. Macdonald) said on Second Reading, I think, that he wished that the Chief Secretary would take time off from his ceaseless pursuit of matters of tax avoidance and evasion.

I want to put it to the right hon. Gentleman that this obsession of his—I believe it to be an obsession—is doing infinite harm. It is odd that such an admirable activity should do infinite harm, but I am certain that it does. Anyone who listened—[Interruption.]—we will come to that in a minute. Anyone who listened to the debates, for instance, on close companies, and the Minister of State's replies, would gather that the Treasury Bench look on close companies as a sort of tax haven, whereas they are part of the true foundation of much of the nation's strength.

A number of references have been made to a brilliant speech recently delivered by Professor Wheatcroft and I will read just one extract from it, referring directly to the Chief Secretary. This is what Professor Wheatcroft said: I am fully persuaded that one of the main reasons why this country lacked growth in 1966 and 1967 was the pre-occupation of so many businessmen with tax. They had to come to lectures, read numerous papers and articles and consult professional advisers in order to understand how they sshould conduct their affairs in future, having regard to these new, complicated and obscure taxes. Instead of getting on with their normal task of producing goods or services at the lowest cost, they had to learn to re-adjust their activities in the light of the new taxes as otherwise they would quickly be out of business. I believe that to be exactly true, and I am sure that the Chief Secretary knows that Professor Wheatcroft's judgment will command respect.

The Chief Secretary knows very well that we have concentrated a great deal of our attack on the Bill on Clause 15 and Schedule 8. He knows very well that principally in that Clause we tried to secure compensation not just for the thalidomide cases, which we did, but for the breadwinner and those affected by broken marriages, for example. The answer which we were given, right up to last night, by the Chief Secretary, led one to the conclusion that he was thinking only in terms of tax evasion, as if people got themselves killed or divorced in order to avoid the payment of tax.

I quote from a letter which the Chief Secretary wrote to me on 25th June explaining why he could not meet a particular case, in relation to this issue, which I had put to him. He wrote: I recognise that this is not the answer for which you had hoped; but perhaps I could make two final points. Firstly, cases of this kind, on any basis, are likely to be pretty few. Secondly; what cases there are will consist mainly of older children. What an appalling argument to put forward to meet an admitted injustice! The Bill is full of injustices. It is full of petty meannesses. Throughout our opposition we have made that clear to the Treasury Bench, but they had not been ready to meet the cases which we put to them, particularly on Clause 15.

As I conclude, I give my warmest thanks to the team who worked with me in the various stages of the Bill. They are too many to single out, but it would be wrong of me not to mention my hon. Friends the Members for Worthing and Wanstead and Woodford (Mr. Patrick Jenkin), who have battled manfully and who have outgunned the Treasury team at all points.

We come to the last stage of the Bill. It was at one time unusual to vote against a Third Reading, but there have been a number of examples of such a vote in recent years and I have no hesitation at all in inviting my right hon. and hon. Friends to vote against the Third Reading of this Bill, not just because in a full year it will take £923 million, by far the largest sum ever raised in increased taxation in a Budget, from the people of this country, but more because it is a monument to the failure of the Chancellor of the Exchequer and of the Government, first, to control public expenditure in this country and, secondly, to encourage the flood of savings which we believe can be tapped for the benefit of the country. In our view the Bill is unfair. It enshrines policies to which we are bitterly opposed. I therefore invite my hon. and right hon. Friends to oppose it on Third Reading.

10.5 p.m.

Mr. Diamond

The right hon. Member for Enfield, West (Mr. Iain Macleod) referred at the outset of his speech to the difficulties experienced in discussing the Bill upstairs and to the problems arising out of our new procedure. I will devote the first few minutes of what I intend to be a short speech to that subject.

As the right hon. Gentleman said, this is not the appropriate occasion for a long economic; speech. One cannot deal with economic matters briefly. Moreover, my right hon. Friend said earlier what had to be said, and it would be impossible for me to reply in detail to all the points that have been raised. However, I assure hon. Members on both sides of the House that I have taken careful note of what they have said and that I hope to have an occasion to pursue these matters later.

In discussing the procedure which we adopted this year, I wish to mention some things in which I believe sincerely and profoundly. The success or otherwise of any experiment—indeed, of our ordinary procedure, but in particular of any experiment—depends on each one of us. It is our own self-discipline that makes this place work. You are in the Chair, Mr. Speaker, but you, too, would be incapable of maintaining order in the House if we had not all accepted and developed a proper sense of self-discipline in our affairs.

The experiment of taking a Bill upstairs also requires self-discipline. I regret that one cannot draw the conclusions that one might clearly have liked to have drawn from this experiment, since it was not given a fair chance. [HON. MEMBERS: "Rubbish."] The fact is that we have not had a full and adequate discussion of all the important Clauses in the Bill.

Dame Irene Ward (Tynemouth)

Hear, hear.

Mr. Diamond

At the same time, we have spent more time discussing the Bill than any other Bill, with one exception, since the war. We must, therefore, draw the conclusion that we must think a little more carefully about what our methods should be.

The right hon. Member for Enfield, West knows as well as I do that I hope that on future occasions, not only on the Finance Bill but on other Measures, we could move more readily towards what I believe to be the only solution for adequate, crisp debate; and that is agreed, voluntary time-tables—[Interruption.]— agreed not necessarily in advance for the whole of a Bill but from time to time. The right hon. Gentleman's whole point in disliking this experiment is that he feels that he could manage affairs much better by discussions—

Dame Irene Ward

So he could.

Mr. Diamond

—on this sort of basis. I am saying that I very much hope that this—which I think is the next major step in democracy and which it is up to all of us to understand and to take—will be developed. It does not matter whether one is on the Government side of the House or in opposition. I have had many years of what I agree is the best schooling of all, and that is sitting on the benches opposite.

Sir D. Glover

Where the right hon. Gentleman will soon be again.

Mr. Diamond

The hon. Member for Ormskirk (Sir D. Glover) is the last person to challenge me on this. He will recollect that many years ago I said to him that he should not feel so uncomfortable. I explained to him that, like marriage, the first seven years are the worst. Who knows whether or not that may be true.

The next short point I would make about our procedure is that many hon. Members have felt excluded from our debates and that it has not been satisfactory to provide the alternative of extended time on the Floor of the House. I admit that the idea of giving yet a third time for matters which have already been discussed twice invites no appetite. This means that we must develop some other method of dealing with the problem.

I would only say in this connection that I understand that an interesting experiment is going on in another place, where, for the first time, a Standing Committee has been set up composed of Members of all sides of that place and where it is open to any Member of that place to attend, move Amendments and speak to Amendments. In a matter like this, one wants to have regard to experience which we learn as we go along, and it is not wrong to refer once more to it. I gave evidence to the Select Committee: some may have thought one way, and others another.

I turn next to the very interesting speech of my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), who always speaks forthrightly. If I may say so, I thought that tonight he spoke with unusual forthrightness. I was not quite sure, having regard to the hour of the debate, whether his irritation was caused by his having to wait over-long for his dinner or by the fact—I could well understand it—that day after day and night after night he had had to endure debates in Committee without feeling free to make his proper contribution to them. For that self-discipline I thank him and, indeed, everyone who contributed so constructively to the passage of the Bill.

While I understand that he might have been seeking an opportunity to express some of his irritation and his indignation, I thought that it hit the wrong target. I know that he does not regard my hon. Friend the Financial Secretary in any but a warm and affectionate way, but perhaps as the Financial Secretary is not here I may reply to some of the points made by my hon. Friend.

My hon. Friend should realise that we have now had at least four investigations into the effect of higher taxes on willingness to earn, willingness to exert additional effort—their effect on over'time, and so on. A further investigation is now under way, the Reddaway Commission, commissioned by my right hon. Friend. It is not the case that we are not willing to examine these matters; we are most willing to do so. There may be a useful field for further examination in due course. I have taken on board all that my hon. Friend said. I am sure that he did not wish to be unduly critical of the Financial Secretary.

I turn to what the right hon. Gentleman said about my attitude to tax and the Opposition's attitude to several of the major issues of the Bill. I am thinking of the aggregation of minors' income, of post-cessation receipts of certain professional men, mainly barristers, and of aggregation of policies which have previously escaped aggregation under the Married Women's Property Act. On all these matters I believe that the Opposition have not taken a reasonable point of opposition to excessive anti-tax aviodance activity on my part but have taken a line which is consistent only with maintaining tax privileges which are long overdue for reform. The aggregation of minors' income is long overdue. The post-cessation receipts of barristers—or, rather, of professional men—is a matter that everyone has been expecting to be dealt with year after year, and one, I should have thought, that most thinking members of that most respected profession would wish to have removed from their privileges.

It is extremely regrettable that the Opposition, in spite of the right hon. Gentleman's appreciation, which he expressed only a day or two ago, of the need of the Chancellor of the Exchequer to use every reasonable way to counter tax avoidance, should have fought, and fought so hard, and that, as he rightly said, what inevitably happens, happened. If individuals will not exert self-discipline, if Oppositions will not exert self-discipline, they can, of course, wreck the proceedings of this House. It is open to them to do so. All that the Government can then do is to respond in the way they have done. We have seen over the years that Opposition rights have been diminished by Government after Government because they have not been prepared themselves to restrict their own activities. I would be anxious to avoid any continuation of that. That is why I draw attention in particular to what the right hon. Gentleman said.

I sense that the House wishes to come to a conclusion on this matter. [HON. MEMBERS: "Hear, hear."] We have been discussing for a very long time and I have been made very familiar indeed with these proposals. I do not share the view that the right hon. Gentleman expressed as to our future. I take the view that the Chancellor took. We are embarking on a difficult period. This Bill puts it in context. My right hon. Friend has said very plainly that we look to our people to do their best, notwithstanding that the level of consumption is not planned to be higher than it was

in the period of last autumn. That is a great challenge. My right hon. Friend did not promise anything easy. He referred to "two years of hard slog". We are starting those two years. I believe we shall pull though them satisfactorily.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 295, Noes 243.

Division No. 268.]	AYES	[10.17 p.m.
Albu, Austen	Dunn, James A.	Jeger, Mrs. Lena(H'b'n&St.P'cras,S.)
Allaun, Frank	Dunnett, Jack	Jenkins, Hugh (Putney)
Alldritt, Walter	Dunwoody, Mrs. Gwyneth (Exeter)	Jenkins, Rt. Hn. Roy (Stechford)
Allen, Scholefield	Dunwoody, Dr. John (F'th & C'b'e)	Johnson, Carol (Lewisham, S.)
Anderson, Donald	Edwards, Robert (Bilston)	Johnson, James (K'ston-on-Hull, W.)
Archer, Peter	Edwards, William (Merioneth)	Jones, Dan (Burnley)
Armstrong, Ernest	Ellis, John	Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)
Ashley, Jack	English, Michael	Jones, J. Idwal (Wrexham)
Atkins, Ronald (Preston, N.)	Ennals, David	Judd, Frank
Atkinson, Norman	Ensor, David	Kelley, Richard
Bacon, Rt. Hn. Alice	Evans, Albert (Islington, S.W.)	Kenyon, Clifford
Bagier, Gordon A. T.	Evans, Ioan L. (Birm'h'm, Yardley)	Kerr, Mrs. Anne (R'ter & Chatham)
Barnes, Michael	Fitch, Alan	Kerr, Dr. David (W'worth, Central)
Barnett, Joel	Fletcher, Raymond (Ilkeston)	Kerr, Russell (Feltham)
Beaney, Alan	Fletcher, Ted (Darlington)	Lawson, George
Bence, Cyril	Foley, Maurice	Leadbitter, Ted
Benn, Rt. Hn. Anthony Wedgwood	Foot, Rt. Hn. Sir Dingle (Ipswich)	Ledger, Ron
Bennett, James (G'gow, Bridgeton)	Foot, Michael (Ebbw Vale)	Lee, Rt. Hn. Frederick (Newton)
Bidwell, Sydney	Ford, Ben	Lee, Rt. Hn. Jennie (Cannock)
Bishop, E. S.	Forrester, John	Lee, John (Reading)
Blackburn, F.	Fowler, Gerry	Lestor, Miss Joan
Boardman, H. (Leigh)	Fraser, John (Norwood)	Lever, L. M. (Ardwick)
Booth, Albert	Freeson, Reginald	Lewis, Arthur (W. Ham, N.)
Boston, Terence	Gardner, Tony	Lewis, Ron (Carlisle)
Bottomley, Rt. Hn. Arthur	Garrett, W. E.	Lipton, Marcus
Boyden, James	Ginsburg, David	Luard, Evan
Braddock, Mrs. E. M.	Gordon Walker, Rt. Hn. P. C.	Lyon, Alexander W. (York)
Bradley, Tom	Gourlay, Harry	Lyons, Edward (Bradford, E.)
Bray, Dr. Jeremy	Gray, Dr. Hugh	Mabon, Dr. J. Dickson
Brooks, Edwin	Greenwood, Rt. Hn. Anthony	McBride, Neil
Brown, Rt. Hn.George (Belper)	Gregory, Arnold	MacColl, James
Brown, Hugh D. (G'gow, Provan)	Griffiths, Eddie (Brightside)	MacDermot, Niall
Brown, Bob(N'c'tle-upon-Tyne,W.)	Griffiths, Rt. Hn. James (Llanelly)	Macdonald, A. H.
Brown, R. W. (Shoreditch & F'bury)	Griffiths, Will (Exchange)	McGuire, Michael
Buchan, Norman	Gunter, Rt. Hn. R. J.	McKay, Mrs. Margaret
Buchanan, Richard	Hamilton, James (Bothwell)	Mackenzie, Gregor (Rutherglen)
Butler, Herbert (Hackney, C.)	Hamling, William	Mackie, John
Butler, Mrs. Joyce (Wood Green)	Hannan, William	Mackintosh, John P.
Cant, R. B.	Harper, Joseph	Maclennan, Robert
Carmichael, Neil	Harrison, Walter (Wakefield)	McNamara, J. Kevin
Carter-Jones, Lewis	Hart, Rt. Hn. Judith	Mahon, Peter (Preston, S.)
Castle, Rt. Hn. Barbara	Haseldine, Norman	Mahon, Simon (Bootle)
Cos, Denis	Hattersley, Roy	Mallalieu, E. L. (Brigg)
Coleman, Donald	Hazell, Bert	Mallalieu, J. P. W.(Huddersfield,E.)
Concannon, J. D.	Healey, Rt. Hn. Denis	Marks, Kenneth
Conlan, Bernard	Heffer, Eric S.	Marquand, David
Corbet, Mrs. Freda	Henig, Stanley	Marsh, Rt. Hn. Richard
Crawshaw, Richard	Herbison, Rt. Hn. Margaret	Mason, Rt. Hn. Roy
Cronin, John	Hobden, Dennis	Maxwell, Robert
Crosland, Rt. Hn. Anthony	Hooley, Frank	Mayhew, Christopher
Crossman, Rt. Hn. Richard	Horner, John	Mellish, Rt. Hn. Robert
Cullen, Mrs. Alice	Houghton, Rt. Hn. Douglas	Mendelson, J. J.
Dalyell, Tam	Howarth, Harry (Wellingborough)	Mikardo, Ian
Darling, Rt. Hn. George	Howell, Denis (Small Heath)	Millan, Bruce
Davidson, Arthur (Accrington)	Hoy, James	Miller, Dr. M. S.
Davies, Ednyfed Hudson (Conway)	Huckfield, Leslie	Milne, Edward (Blyth)
Davies, Harold (Leek)	Hughes, Rt. Hn. Cledwyn (Anglesey)	Mitchell, R. C. (S'th'pton, Test)
Davies, Ifor (Gower)	Hughes, Emrys (Ayrshire, S.)	Molloy, William
Delargy, Hugh	Hughes, Hector (Aberdeen, N.)	Moonman, Eric
Dell, Edmund	Hughes, Roy (Newport)	Morgan, Elystan (Cardiganshire)
Dempsey, James	Hynd, John	Morris, Alfred (Wythenshawe)
Dewar, Donald	Irvine, Sir Arthur (Edge Hill)	Morris, Charles R. (Openshaw)
Diamond., Rt. Hn. John	Jackson, Colin (B'h'se & Spenb'gh)	Morris, John (Aberavon)
Dickens, James	Jackson, Peter M. (High Peak)	Moyle, Roland
Doig, Peter	Jay, Rt. Hn. Douglas	Mulley, Rt. Hn. Frederick
Murray, Albert	Reynolds, Rt. Hn. G. W.	Thomson, Rt. Hn. George
Neal, Harold	Rhodes, Geoffrey	Thornton, Ernest
Newens, Stan	Richard, Ivor	Tinn, James
Noel-Baker, Francis (Swindon)	Roberts, Albert (Normanton)	Tuck, Raphael
Noel-Baker,Rt.Hn.Philip (Derby, S.)	Roberts,Rt.Hn.Goronwy(Caernarvon)	Urwin, T. W.
Oakes, Gordon	Roberta, Gwtlym (Bedfordshire, S.)	Varley, Eric G.
Ogden, Eric	Robertson, John	Walker, Harold (Ooncaster)
O'Malley, Brian	Robinson, Rt. Hn. Kenneth (St.P'c'as)	Wallace, George
Oram, Albert E.	Robinson, W. O. J. (Walth'stow, E)	Watkins, David (Consett)
Orme, Stanley	Rodgers, William (Stockton)	Watkins, Tudor (Brecon & Radnor)
Oswald, Thomas	Roebuck, Roy	Weitzman, David
Owen, Dr. David (Plymouth, S'tn)	Rogers, George (Kensington, N.)	Wellbeloved, James
Owen, Will (Morpeth)	Rose, Paul	Wells, William (Walsall, N.)
Page, Derek (King's Lynn)	Rowlands, E.	Whitaker, Ben
Paget, R. T.	Ryan, John	Whitlock, William
Pannell, Rt. Hn. Carles	Shaw, Arnole (llford, S.)	Wilkins, W.A.
Pannell, Rt. Hn. Charles	Sheldon, Robert	Willey, Rt. Hn. Frederick
Park, Trevor	Shinwell, Rt. Hn, E.	Williams, Alan (Swansea, W.)
Parker, John
Parkin,Ben (Paddington,N.)	shore, Rt. Hn. Peter	Williams, Alan Lee (Hornchurch)
Parkin Brian (Bedford, N.)	Short, Mrs. Renée (W'hampton, N. E.)	Williams, Clifford (Abertillery)
Pavitt Laurence	Silkin, Rt. Hn. JOhn (Deptord)	Williams, Mrs. Shirley (Hitchin)
Pearson, Arthur (Pontypridd)	Silverman, Julius	Williams, W. T. (Warrington)
Peart, Rt. Hn Fred	Slater, Joseph	Willis, Rt. Hn. George
Pentland, Norman	Snow, Julian	Wilson, Rt. Hn. Harold (Huyton)
Perry, Ernest C. (Battersea, S.)	Spriggs, Leslie	Wilson, William (Coventry, S.)
Perry, George H. (Nottingham, S. )	Steele, Thomas (Dunbartonshire, W.)	Winnick, David
Prentice, Rt. Hn. R. E.	Stewart, Rt. Hn. Michael	Woodburn, Rt. Hn. A.
Price, Christopher (Perry Barr)	Stonehouse, Rt. Hn. John	Woof, Robert
Price, Thomas (Westhoughton)	Strauss, Rt. Hn. G. R.	Wyatt, Woodrow
Price, William (Rugby)	Summerskill, Hn. Dr. Shirley	Yates, Victor
Probert, Arthur	Swingler, Stephen
Randall, Harry	Symonds, J. B.	TELLERS FOR THE AYES:
Rankin, John	Taverne, Dick	Mr. Charles Grey and
Rees, Merlyn	Thomas, Rt. Hn. George	Mr. John McCann.
NOES
Alison, Michael (Barkston Ash)	Costain, A. P.	Hamilton, Michael (Salisbury)
Allason, James (Hemel Hempstead)	Craddock, Sir Beresford (Spelthorne)	Harris, Frederic (Croydon, N.W.)
Astor, John	Crouch, David	Harrison, Brian (Maldon)
Atkins, Humphrey (M't'n & M'd'n)	Crowder, F. P.	Harrison, Col. Sir Harwood (Eye)
Awdry, Daniel	Cunningham, Sir Knox	Harvey, Sir Arthur Vere
Baker, Kenneth (Acton)	Currie, G. B. H.	Harvie Anderson, Miss
Baker, W. H. K. (Banff)	Dalkeith, Earl of	Hastings, Stephen
Balniel, Lord	Dance, James	Hawkins, Paul
Barber, Rt. Hn. Anthony	Davidson, James (Aberdeenshire, W.)	Hay, John
Batsford, Brian	d'Avigdor-Goldsmid, Sir Henry	Heald, Rt. Hn. Sir Lionel
Beamish, Col. Sir Tufton	Dean, Paul (Somerset, N.)	Heath, Rt. Hn. Edward
Bell, Ronald	Deedes, Rt. Hn. W. F. (Ashford)	Heseltine, Michael
Bennett, Sir Frederic (Torquay)	Dodds-Parker, Douglas	Higgins, Terence L.
Bennett, Dr. Reginald (Gos. & Fhm)	Doughty, Charles	Hiley, Joseph
Berry, Hn. Anthony	Douglas-Home, Rt. Hn. Sir Alec	Hill, J. E. B.
Biffen, John	Drayson, G. B.	Hirst, Geoffrey
Biggs-Davison, John	du Cann, Rt. Hn. Edward	Holland, Philip
Birch, Rt. Hn. Nigel	Elliot, Capt. Walter (Carshalton)	Hordern, Peter
Black, Sir Cyril	Emery, Peter	Hornby, Richard
Blaker, Peter	Errington, Sir Eric	Howell, David (Guildford)
Boardman, Tom (Laisester, S.W.)	Eyre, Reginald	Hunt, John
Body, Richard	Farr, John	Hutchison, Michael Clark
Bossom, Sir Clive	Fisher, Nigel	Iremonger, T. L.
Braine, Bernard	Fletcher-Cooke, Charles	Jenkin, Patrick (Woodford)
Brewis, John	Fortescue, Tim	Johnson Smith, G. (E. Grinstead)
Brinton, Sir Tatton	Foster, Sir John	Jones, Arthur (Northants, S.)
Bromley-Davenport, Lt.-Col. Sir Walter	Fraser, Rt.Hn.Hug (St'fford & Stone)	Jopling, Michael
Bruce-Gardyne, J.	Galbraith, Hn. T. G.	Joseph, Rt. Hn. Sir Keith
Bryan, Paul	Gibson-Watt, David	Kaberry, Sir Donald
Buchanan-Smith, Alick (Angus, N & M)	Giles., Rear-Adm. Morgan	Kerby, Capt. Henry
Buck, Antony (Colchester)	Gilmour, Ian (Norfolk, C.)	Kershaw, Anthony
Bullus, Sir Eric	Gilmour, Sir John (Fife, E.)	Kimball, Marcus
Burden, F. A.	Glover, Sir Douglas	King, Evelyn (Dorset, S.)
Campbell, B. (Oldham, W.)	Glyn, Sir Richard	Kirk, Peter
Campbell, Gordon (Moray & Nairn)	Godber, Rt. Hn. J. B.	Kitson, Timothy
Carlisle, Mark	Goodhart, Philip	Knight, Mrs. Jill
Carr, Rt. Hn. Robert	Goodnew, Victor	Lambton, Viscount
Cary, Sir Robert	Gower, Raymond	Lancaster, Col. C. G.
Channon, H. P. G.	Grant, Anthony	Lane, David
Chichester-Clark, R.	Grieve, Percy	Langford-Holt, Sir John
Clark, Henry	Griffiths, Eldon (Bury St. Edmunds)	Legge-Bourke, Sir Harry
Clegg, Walter	Grimond, Rt. Hn. J.	Lewis, Kenneth (Rutland)
Cooke, Robert	Gurden, Harold	Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Cooper-Key, Sir Neill	Hall, John (Wycombe)	Lloyd, lan (P'tsm'th, Langstone)
Cordle, John	Hall-Davis, A. C. F.	Lloyd, Rt. Hn. Selwyn (Wirral)
Corfield, F. V.	Hamilton, Lord (Fermanagh)	Longden, Gilbert

Loveys, W. H.	Peel, John	Summers. Sir Spencer
McAdder, Sir Stephen	Pefcival, Ian	Tapsell, Peter
MacArthur, Ian	Peyton, John	Taylor, Sir Charles (Easthoone)
Maclean, Sir Fitzroy	Pike, Miss Mervyn	Taylor,Edward M.(G'gow.Cathcart)
Macleod, Rt. Hn. lain	Pink, R. Bonner	Taylor, Frank (Mow Side)
McMaster, Stanley	Pounder, Rafton	Teelmg, Sir William
Macmillan, Maurice (Farnham)	Powell, Rt. Hn. J. Enoch	Temple, John M.
Maddan, Martin	Price, David (Eastleigh)	Thorpe, Rt. Hn. Jeremy
Maginnis, John E.	Prior, J. M. L.	Tilney, John
Marples, Rt. Hn. Ernest	Pym, Francis	Turton, Rt. Hn. R. H.
Marten, Neil	Quennell, Miss J. M.	Van straubenzee, W. R.
Maude, Angus	Ramsden, Rt. Hn. James	Vaughan-Morgan, Rt. Hn. Sir John
Maudlfng, Rt. Hn. Reginald	Rawlinson, Rt. Hn. Sir Peter	Vickers, Dame Joan
Mawby, Ray	Rees-Davies, W. R.	Waddington, D.
Maxwell-Hytlop, R. J.	Renton, Rt. Hn. Sir David	Wainwright, Richard (Colne Valley)
Maydon, Lt.-Cmdr. S. L. C.	Rhys, Williams, Sir Brandon	Walker, Peter (Worcester)
Mills, Peter (Torrington)	Ridsdale, Julian	Walker-Smith, Rt. Hn. Sir Derek
Mills, Stratton (Belfast, N.)	Rippon, Rt. Hn. Geoffrey	wall, Patrick
Miscamphal, Norman	Rodgers, Sir John (Sevenoaks)	Walters, Dennis
Mitchell, David (Basingstoke)	Rossi, Hugh (Hornsey)	Ward, Dame Irene
Monro, Hector	Royle, Anthony	Weatherill, Bernard
Montgomery, Fergus	Russell, Sir Ronald	Wells, John (Maidstone)
Morgan, Geraint (Denbigh)	St. John-Stevas, Norman	Whitelaw, Rt. Hn. William
Morrison, Charles (Devizes)	Sandys, Rt. Hn. D.	Williams, Donald (Dudley)
Mott-Radclyffe, Sir Charles	Scott, Nicholas	Wills, Sir Gerald (Bridgwater)
Munro-Lucas-Tooth, Sir Hugh	Scott-Hopkins, James	Wilson, Geoffrey (Truro)
Murton, Oscar	Sharpies, Richard	Wolrige-Gordon, Patrick
Nicholls, Sir Harmar	Shaw, Michael (Sc'b'gh & Whitby)	Wood, Rt. Hn. Richard
Nott, John	Silvester, Frederick	Woodnutt, Mark
Onslow, Cranley	Sinclair, Sir George	Worsley, Marcus
Orr, Capt. L. P. S.	Smith, Dudley (W'wick & L'mington)	Wylie, N. R.
Orr-Ewing, Sir Ian	Smith, John (London & W'minster)	younger, Hn. George
Osborn, John (Hallam)	Speed, Keith
Osborne, Sir Cyril (Louth)	Stainton, Keith	TELLERS FOR THE NOES:
Page, Graham (Crosby)	Stodart, Anthony	Mr. R. W.Elliott and
Page, John (Harrow, W.)	Stoddart-Scott, Col. Sir M. (Ripon)	Mr. Jasper More.
Pearson, Sir Frank (Clltheroe)

Bill accordingly read the Third time and passed.